Disclosing Barriers to Takeovers
The European Financial Market in Transition, Hanne Birkmose, Mette Neville, Karsten Engsig Sørensen, eds., Kluwer Law International, 2011
21 Pages Posted: 22 Jun 2011 Last revised: 10 Dec 2012
Date Written: June 22, 2011
Under Article 10 of the Takeover Directive (2004/25/EC) Member States should ensure that, in their annual reports, listed companies publish detailed information on capital structures, agreements etc. that may be barriers to takeovers. This information should also be presented by the board to the annual general meeting. The aim of this provision is to facilitate takeovers by informing potential bidders and investors of such barriers. This paper examines whether this aim has been achieved. It does so by analyzing the provision and its background. It also examines how the implementation of the Directive has worked in Denmark. A survey of 45 listed Danish companies has been carried out with the aim of examining their reaction to the disclosure requirement and presentation to the annual meeting. Also, responses to a questionnaire by 8 institutional investors reveal their reaction to the information disclosed. It is concluded that there has been very little reaction to the information disclosed and that it is therefore questionable how important the information is for shareholders (in Denmark). Therefore it should be considered whether such disclosure should continue to be required in future. Alternatively, the format and extent of the disclosure of information should be improved. A number of suggestions for improvement are made, based on the Danish experience.
Keywords: takeover directive, disclosure requirements, barriers to takeover, listed companies
JEL Classification: K22
Suggested Citation: Suggested Citation