Lobbying for the EU takeover code is in full force. The International Corporate Governance Network (ICGN) has added its support to the group lobbying for the EU takeover code to become law. In a letter to Frits Bolkestein, the EU’s Internal Market Commissioner who is overseeing work on the proposed code, Peter Clapman, chairman of ICGN and also senior vice president and chief counsel of corporate governance at TIAA-CREF said recent proposals concerning the code were a very positive development.
Work on the proposed EU takeover code recommenced in September last year following defeat in July 2001, largely due to German opposition. To maintain the momentum gathered in the code’s 12-year history the commission set up a high level group of company law experts. It is the proposals of this group, put forward in January that the ICGN welcomes. On receipt of the January report Bolkestein said its recommendations would be examined with a view to submitting a revised proposal in the next couple of months.
The ICGN was founded in Washington DC in 1995 by a group of pension funds seeking to enhance international corporate governance principles. Founding members include the California Public Employees Retirement System (CalPERS), the College Retirement Equities Fund (TIAA-CREF) and the Council of Institutional Investors in the US. Other financial institutions and more pension and insurance funds have since joined the network.
Clapman said: “If the law on takeovers is not to become subject to the same sort of tit-for-tat retaliation as that formerly obtained with tariffs, then it seems clear that a unifying, and binding, set of EU principles is both desirable and probably necessary.”
Clapman urges that guidelines should incorporate the best practices in takeovers. The ICGN believes shareholders, not regulators or political bodies should determine the success of a takeover bid and that shareholders should vote in proportion to the financial interest owned in the company. It also recommends better disclosure of company control structures to help avoid under-valuation of companies.