17.2 In Whose Interests Shall Board Members Act? 493tral”. The main company law rule is that board members must act in the interests
of the company whether or not the company has become a takeover target. There
is no such thing as a general company law duty of “board neutrality” in the con-
text of takeovers. Neither is there any general company law duty to maximise the
price that shareholders can get for their shares. Apart from the Directive on take-
over bids, Community law has not explicitly addressed the question in whose in-
terests the target’s board should act in the context of an unsolicited bid, and the
Directive on takeover bids does not lay down any board duty to remain neutral or
passive in front of a takeover bid.^9
The purpose of the Directive on takeover bids is to “establish minimum guidelines for the
conduct of takeover bids and ensure an adequate level of protection for holders of securities
throughout the Community”.^10
According to the general principles set out in Article 3 of the Directive, “the board of an
offeree company must act in the interests of the company as a whole”.^11 Where it advises
the holders of securities, “the board of the offeree company must give its views on the ef-
fects of implementation of the bid on employment, conditions of employment and the loca-
tions of the company’s places of business”.^12 For this purpose, “[t]he board of the offeree
company shall draw up and make public a document setting out its opinion of the bid and
the reasons on which it is based, including its views on the effects of implementation of the
bid on all the company’s interests and specifically employment, and on the offeror’s strate-
gic plans for the offeree company and their likely repercussions on employment and the lo-
cations of the company’s places of business”.^13 Furthermore, “all holders of the securities
of an offeree company of the same class must be afforded equivalent treatment”. If a person
acquires control of a company, “the other holders of securities must be protected”.^14
This means that the Directive on takeover bids forces Member States to ensure that the
target’s board has a duty to act in the interests of the company as a whole. Those interests
include “all the company’s interests”.
The Directive does not clearly distinguish between the interests of stakeholders and the
firm’s own interests. “All the company’s interests” include as a minimum requirement at
least:^15 the interests of the company’s stakeholders, in particular the interests of employees;
the interests of the target’s other shareholders to take decisions in an informed way; the in-
terests of all shareholders to receive equivalent treatment; and the interests of minority
shareholders to exit the target where the bidder has obtained control.
The Directive nevertheless recognises the interests of the firm as worthy of protection.
The Directive protects: the interests of an offeree company as a whole;^16 the interests of an
(^9) The popular view is that it does lay down such a board duty. See, for example, Mucci-
arelli FM, White Knights and Black Knights - Does the Search for Competitive Bids
Always Benefit the Shareholders of “Target” Companies? ECFLR 3 (2006) pp 408–425
at p 409.
(^10) Recital 25 of Directive 2004/25/EC (Directive on takeover bids).
(^11) Article 3(1)(c) of Directive 2004/25/EC (Directive on takeover bids). According to
German law, the management board and the supervisory board of the target company
must act in the interests of the target company. § 5(3) WpÜG.
(^12) Article 3(1)(b) of Directive 2004/25/EC (Directive on takeover bids).
(^13) Article 9(5) of Directive 2004/25/EC (Directive on takeover bids).
(^14) Article 3(1) of Directive 2004/25/EC (Directive on takeover bids).
(^15) Article 3(2) of Directive (Directive on takeover bids).
(^16) Article 3(1)(c) of Directive 2004/25/EC (Directive on takeover bids).