DealLawyers.com Blog

From GMI’s News Updates: The EU’s European Commission is continuing its efforts to fight hurdles to takeovers of banks and insurance companies. On November 8, the commission presented a proposal to restrict the power of national insurance and securities regulators to block takeovers. The proposal aims to overcome what the commission calls one of the chief hurdles to cross-border deals: the power of national regulators. The EU’s own banking law of 1999 gives supervisors authority to block mergers in order to guard the safety and soundness of banks and the financial system. The new proposal would require a regulator to disclose specific justification for any such veto, and it would be expanded to include insurance companies and other market deals.

Italian regulators have recently prevented recent takeover attempts of two Italian banks, and the EU may sue Italy for seeking to shield banks from takeovers by Dutch and Spanish entities. During the past year, Banco Bilbao Vizcaya Argentaria SA of Spain and ABN Amro Holding NV of the Netherlands have tried to buy Italian banks but have met behind-the-scenes resistance from Bank of Italy with their domestic encouragement of counterbids.

Nonetheless, Amro recently won approval for its $9.9B bid to buy Banca Antonveneta SpA, but Banco Bilbao was outbid for Banca Nazionale del Lavoro SpA of Rome by Italian insurer Compagnia Assicuratrice Unipol SpA. The EU has pressed the Bank of Italy since February to answer for its resistance to the foreign banks’ bids. Lawyers are reviewing whether there are grounds to sue Italy in an EU court for going against rules on free movement of capital and freedom of business to establish anywhere within the 25-country EU.

Japan’s TSE Bans Golden Shares, Restricts Poison Pills

From GMI’s News Updates: In November, the Tokyo Stock Exchange (TSE) finalized plans to ban publicly traded firms from adopting veto-wielding golden shares. A corporate law taking effect next year will enable firms to more easily issue golden shares, but TSE sees them as undermining the principle of shareholder equality. The TSE also will not permit the issuance of golden shares by the unlisted subsidiaries of publicly traded holding companies.

However, this ban will not apply to companies where the government holds golden shares for policy reasons. Early in the month, Japan’s Ministry of Economy, Trade and Industry considered allowing the use of golden shares under certain conditions, taking a softer position than the TSE. Under METI’s plan, golden shares would need to be limited-term issues, with a provision that they could be voided through shareholder or board resolutions. However, the TSE decided to propose the ban in order to stem overzealous corporate takeover defenses. The New York Stock Exchange currently bans their issuance by firms that are already listed, while the European Union is considering plans to abolish golden shares entirely.

The TSE is also considering restrictions and disclosure requirements on shareholder rights plan poison pills and other takeover defense provisions. The TSE states that it will not permit anti-takeover frameworks where a poison pill becomes locked in when a potential acquirer replaces even a single board member of the target company. The TSE is expected to require a company to detail its triggering mechanisms and shareholder impact as well as the impact on shareholders.