10.3 Third Party as a Source of Remuneration 359Golden shares. The Directive on takeover bids is silent on “golden shares”.
Golden shares typically mean special control rights that a Member State has in a
state-owned or partly state-owned company. It was not necessary to adopt any par-
ticular rules on golden shares, because golden-share type arrangements are usually
prohibited by the EC Treaty or acceptable only in rare circumstances.^134
For example, the German VW-Gesetz (VW Law)^135 provided that no share-
holder could vote with more than 20% of the share capital at the general meeting
of Volkswagen AG and that important decisions, which in other companies only
require 75% of the votes required more than 80% of the votes in that company.
With its interest of approximately 20% of shares, the Land of Lower Saxony
(Niedersachsen) could block important decisions. Furthermore, the Federal State
and the Land of Lower Saxony were each allowed to appoint two representatives
to the company’s supervisory board under the VW Law. In 2007, the ECJ held
that parts of the VW Law were not compatible with Article 56(1) of the EC
Treaty.^136 This case – and further litigation caused by the initial reluctance of the
German government to fully comply with its obligations under the EC Treaty –
paved the way for the attempted takeover of Volkswagen AG by Porsche Auto-
mobil Holding SE.
Squeeze-out right and sell-out right. If the bidder has obtained 90%-95% of the
company following the bid (some variations are possible depending on the Mem-
ber State), the squeeze-out right enables him to require all the holders of the re-
maining securities to sell him those securities at a fair price (section 5.11.7).^137
The result is that the bidder will own 100% of the offeree company. The bidder’s
actions will then not be constrained by minority shareholders’ rights.
The Directive on takeover bids provides for minority shareholders’ sell-out
rights. The provisions on sell-out rights mirror those on squeeze-out rights.^138
Mandatory bids. The Directive on takeover bids also contains rules on manda-
tory bids (see below). However, the mandatory bid rule does not apply “where
control has been acquired following a voluntary bid made in accordance with this
Directive to all the holders of securities for all their holdings”.^139
Mandatory Takeover Bids by a Third Party
In companies whose shares have been admitted to trading on a regulated market,
minority shareholders are protected in three ways under the Directive on takeover
bids.
(^134) The earliest cases were Case C-367/98 Commission v Portugal [2002] ECR I-4731,
paragraph 38; Case C-483/99 Commission v France [2002] ECR I-4781, paragraph 37;
and Case C-503/99 Commission v Belgium [2002] ECR I-4809, paragraph 38.
(^135) Gesetz über die Überführung der Anteilsrechte an der Volkswagenwerk Gesellschaft mit
beschränkter Haftung in private Hand.
(^136) Case C-112/05 Commission v Germany [2007] ECR I-8995.
(^137) Article 15 of Directive 2004/25/EC (Directive on takeover bids). For German law, see
§ 327a AktG.
(^138) Article 16 of Directive 2004/25/EC (Directive on takeover bids).
(^139) Article 5(2) of Directive 2004/25/EC (Directive on takeover bids).