7 - The European Company Statute and the Takeover Directive

Summary

Introduction

This chapter examines the European Company Statute (ECS) and the Takeover Directive, two measures that were delayed by legislative deadlock for decades before they were adopted. Each measure strongly influences the orientation of national corporate governance systems, and for this reason, the original proposals, which aimed for uniformity, gave rise to great controversy. The original intention was that the ECS would provide a stand-alone, supranational system of company law which would operate in parallel to the national systems, while the Takeover Directive would establish in all the Member States a regulatory regime inspired by the United Kingdom's City Code, which truncates managerial discretion in the event of a hostile takeover. As finally adopted, neither instrument achieves these early goals, and both embody important compromises. However, rather than focus on their failure to achieve uniformity, this chapter will examine the way in which both instruments adopt a reflexive approach and so strike a balance between competing supranational and national interests.

The ECS combines procedural regulation with references back to national law to give the Member States scope to adopt a variety of regulatory approaches, whilst giving European Companies considerable freedom to move across borders. The mandatory process of bargaining over employee participation may trigger experiments with participatory structures which might, if successful, be disseminated to other firms and perhaps ultimately to other Member States.