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, the chairman of ICGN, Peter Clapman (also senior vice president and chief counsel of corporate governance at TIAA-CREF) said recent proposals concerning the code were a very positive development.
Having been defeated in July 2001, largely due to German opposition, work on the proposed EU takeover code recommenced in September last year. 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.
ICGN was founded in Washington DC in 1995 primarily 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. Since then other financial institutions and more pension and insurance funds have joined.
Clapman commented: “If the law on takeovers is not to become subject to the same sort of tit-for-tat retaliation as that which 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 practises in takeovers. 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. The ICGN also approves the use of anti-takeover tactics, such as “poison pills”, if they have shareholder approval. It also recommends better disclosure of company control structures to help avoid the under-valuation of companies.