---

Company Law Reform Bill [HL]

Yet again, when we come to implementation of a Community directive, we have the choice of whether we follow a copy-out approach, which is to take the words used in the directive, or use a different approach that may be of more help to domestic readers to understand what the obligation is about. That is the approach that has been taken in this clause. As the noble Lord rightly says, Clause 643 is part and parcel of the provisions seeking to implement Article 11 of the takeover directive. He is right that Article 11.4 refers to a time when,"““the offeror holds 75 % or more of the capital carrying voting rights””." It is the latter part of that expression that his amendment picks up. So why not use those terms? The problem from our point of view is that that expression does not strike us as terribly helpful to the businessman or practitioner coming to it cold; nor does it sit very naturally with existing language and concepts in companies legislation. If we were going to adopt his approach we would have to go further still, because Article 11.4 of the directive is not the end of the story as far as the directive definition of ““breakthrough”” is concerned, and that is what one would have to look to. For example, Article 11.6 says that Articles 11.3 and 11.4,"““shall not apply to securities where the restrictions on voting rights are compensated for by specific pecuniary advantages””." What does that mean? To understand that, one needs to look at the definition of ““securities”” in Article 2 of the directive, and so the paper chase goes on. All those ideas have to be captured to ensure proper implementation. The view taken, therefore, was that it is better to give these concepts as plain a meaning as possible for the user of the domestic legislation and language and concepts that fitted readily into common present understanding and present use in companies legislation. We think this clause does that. Regarding the specific question of the words ““in value”” in the clause, we think it is clear what they mean: they refer to the nominal value of shares, so to achieve the breakthrough threshold the bidder must reach 75 per cent of the nominal value of the company’s voting shares.