556 20 Acquisition Finance
rights Directive (2007/36/EC).^23 Directive 2007/36/EC requires a “record date”.
Member States must provide that “the rights of a shareholder to participate in a
general meeting and to vote in respect of his shares shall be determined with re-
spect to the shares held by that shareholder on a specified date prior to the general
meeting (the record date)”.^24 Depending on the governing law, the main rule is
that a single record date applies to all companies and that at least eight days must
elapse between the latest permissible date for the convocation of the general meet-
ing and the record date.^25
20.4 Financial Assistance
If, in a share deal, the acquirer must pay the purchase price at the time of closing
(according to the “Zug-um-Zug” or “cash against delivery” principle), the acquirer
will need a lot of money. The funding needs of the acquirer will be reduced if the
acquirer can use the assets of the target company to pay for the shares. However,
because of legal constraints, the target company may not freely give financial as-
sistance with a view to the acquisition of its shares by a third party. The Second
Directive lays down common rules on prohibited financial assistance for public
limited-liability companies in the EU. On the other hand, all forms of financial as-
sistance and functional equivalents to financial assistance are not prohibited.
The interpretation of financial assistance rules tends to be complicated. Usu-
ally, it is easier to understand them if one distinguishes between the following
questions:
- The company. Whose actions are constrained by the rules? In other words, one
should choose the perspective (the company). - The target. To what shares do the rules apply? In other words, one should iden-
tify the companies whose shares are being acquired (for example, shares in the
company itself, shares in the company’s parent company or subsidiaries, shares
in other companies). - The acquirer. Whose acquisitions are covered by the rules? One should identify
the acquirers covered by the restrictions (for example, a third party, a subsidi-
ary of the third party, an agent of the third party, and so forth). - The recipient. To whom must the company not give financial assistance under
the rules? In other words, one should identify the parties to whom financial as-
sistance may be given and the parties that must not receive financial assistance
(for example, any party, the party who acquires the shares, an intermediary). - Financial assistance. What kinds of actions are constrained by the rules? One
should thus define restricted forms of financial assistance.
(^23) Directive 2007/36/EC on the exercise of certain rights of shareholders in listed compa-
nies.
(^24) Article 7(2) of Directive 2007/36/EC.
(^25) Article 7(3) of Directive 2007/36/EC.