The Dutch Perspective on Takeover Bid Directive with Emphasis on Due Diligence Issues from Practitioners' Perspective

Abstract

Even though The Treaty on EU sets high standards for sustainable development, the Directive as it is today lacks the reference to this topic. Practical implications of this shortcoming are seen in praxis. In the current case of KPN, the Dutch telecommunications provider, who is fighting a bid by América Móvil, the Latin American mobile group, it can be seen that the offer memorandum does not contain any provisions on corporate social responsibility. The Directive’s requirement, that the offer memorandum must include information necessary to enable the shareholders of the target company to reach a properly informed decision on the bid, does apparently not suffice in getting all relevant information out including information on the planet and people aspects of a certain business. These aspects are important for providing a full picture of the risks and opportunities of a business enterprise. The preparation of an offer memorandum entails a due diligence investigation into the target company's business risks and opportunities, including the risks in the worldwide operations and supply chains in relation to CSR issues and to be better prepared for the future. Offer memorandum typically only contains the information explicitly required by law, the drafters often follow a 'compliance approach'. The paper suggests that a change in the text of the Directive would be welcomed: a clear reference to CSR should be embedded in the Directive’s articles.