494 17 Duties of the Board in the Context of Takeovers
offeree company not unnecessarily to be hindered in the conduct of its affairs;^17 and the in-
terests of an offeree company to take action in the ordinary course of its business.^18
The Directive does not explicitly set out any ranking for the company’s different inter-
ests (the interests of the firm and the interests of its various stakeholders) or lay down their
relative weights. Neither does the Directive lay down any duty to recommend a particular
bid or the grounds for refusing to recommend a bid. The board may say no, provided that it
discloses the reasons on which its opinion is based.^19 The board may also seek alternative
bids.^20
Although the Directive leaves many questions open, the wording of the Directive im-
plies that the target’s board must not have a duty to get the best price for shareholders at the
cost of the interests of the target’s (other) main stakeholders.
Furthermore, the Directive on takeover bids does not restrict the board’s general duty of
care and fiduciary duties. Those duties are typically owed to the company rather than to any
particular shareholder or shareholders in general. Delaware law shows that there is no rea-
son to adopt fundamentally different duties of care or fiduciary duties when somebody
makes an unsolicited offer for the company. Being a target is a normal situation in the life
of a company, and the normal duties of care and fiduciary duties should apply. New duties
of care and fiduciary duties should be adopted only for an important reason.^21 In Delaware,
they are applied only after the board already has accepted a change of control (the Revlon
test).
The Directive on takeover bids thus does not require the target’s board to be neutral. The
general principle of equivalent treatment of shareholders^22 does not mean the equivalent
treatment of the interests of existing shareholders and those of potential shareholders.^23 The
board has a duty to take certain interests into account. The board’s general duty of care and
fiduciary duties apply.
Frustration and Community law. The duty of the target’s board to act in the inter-
ests of the company might nevertheless be constrained by particular provisions of
law.^24 According to Community law, the target’s board can have a limited duty not
to frustrate a public takeover bid depending on the governing law.
The Directive on takeover bids does not prohibit the target from frustrating the
bid. Instead, the Directive sets out how corporate action which may result in the
frustration of the bid must be decided on.^25 The provisions of the Directive on
frustating the bid are optional for the Member States and can be optional for target
companies depending on the governing law.^26
This can be illustrated by German law. § 33(1) WpÜG prohibits the target’s
management board from taking “any actions which could prevent the success of
(^17) Article 3(1)(f) of Directive 2004/25/EC (Directive on takeover bids).
(^18) Article 9(3) of Directive 2004/25/EC (Directive on takeover bids).
(^19) Article 9(5) of Directive 2004/25/EC (Directive on takeover bids).
(^20) Article 9(2) of Directive 2004/25/EC (Directive on takeover bids).
(^21) See, for example, Merkt H, Verhaltenspflichten des Vorstands der Zielgesellschaft bei
feindlichen Übernahmen, ZHR 165 (2001) p 226.
(^22) Article 3(1)(a) of Directive 2004/25/EC (Directive on takeover bids).
(^23) See also Merkt H, op cit, p 247.
(^24) See, for example, ibid, p 225.
(^25) Articles 9(2) and 9(3) of Directive 2004/25/EC (Directive on takeover bids).
(^26) Article 12 of Directive 2004/25/EC (Directive on takeover bids).