European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006

Author:Mr Abigail Kennedy
Profession:Dillon Eustace
  1. Introduction

    The EU Takeovers Directive (2004/25/EC) (the "Takeovers

    Directive") has been transposed into Irish law by the

    European Communities (Takeover Bids (Directive 2004/25/EC))

    Regulations, 2006 (S. I. No. 255 of 2006) (the "Takeovers

    Regulations"). The stated aim of the Takeovers Directive

    is to strengthen the Single Market in financial services by

    facilitating cross-border restructuring and enhancing minority

    shareholder protection. Many of the provisions of the Directive

    are already contained in the existing Irish regime for the

    supervision of takeovers set out in the Irish Takeover Panel

    Act, 1997 (the "Act"), the Takeover Rules, 2001 (the

    "Rules") and the Companies Acts 1963 2005, which will

    continue to apply. The Takeovers Regulations cater for those

    areas not already dealt with in the existing regime or areas of

    the regime that needed to be adjusted as a result of the

    requirements of the Takeovers Directive.

    As the Directive applies only to companies admitted to

    trading on a regulated market (in Ireland, the Official List of

    the Irish Stock Exchange), the Regulations will not apply to

    takeovers of companies listed on the Irish Enterprise Exchange

    and this position is consistent with the existing regime.

  2. Closed-Ended Funds

    Controversially, however, the Takeovers Regulations also

    apply to Irish authorised closed-ended funds which are listed

    on the Official List. Industry submissions to grant such funds

    a derogation from the Takeovers Regulations have not been

    accepted. This has the result that such funds are now subject

    to the annual levy payable to the Takeover Panel (which will be

    based on the market capitalisation value of the company) and

    the mandatory offer rules which require any person holding 30%

    or more of the value of the fund to bid for the remainder of

    the fund (unless exempted by the Panel and whitewashed by

    independent shareholders).

    Whilst the Takeovers Regulations will not impact on those

    Irish domiciled closed-ended funds which do not seek admission

    to listing, many closed-ended funds do seek a listing to

    facilitate investment by certain categories of investors who

    can only invest in a listed product or whose capacity to list

    in an unlisted fund is restricted.

    One way this might be achieved is to provide an opportunity

    during the fund's life at which investors will have a

    capacity to request redemption out of the assets of the fund.

    While creating (or converting an existing fund into) such a

    limited liquidity...

To continue reading