Institutions lobby Germany on takeover directive

UK/GERMANY – A number of UK and US institutional investors, including Hermes, the investment manager of the British Telecom pension fund and Morley Fund Management, have written to the German government in protest at the country’s controversial opt-out clause from the EU corporate takeover directive.

The institutions are also understood to include, Standard Life, and TIAA-Cref in the US.

Anita Skipper, head of corporate governance at Morley Fund Management, explains the motivation behind their address to the German authorities: “We believe it (the EU takeover directive) was amended as a result of lobbying by a couple of very large German companies.
“The result of this lobbying means that if the management want to utilise poison pills in the event of a takeover then only the supervisory board needs to approve such measures. The shareholders no longer have to approve these takeover tools. We believe that this should not be the case as shareholders are the owners of the company at the end of the day and we should have a say in whether or not a company should be taken over.”

Skipper adds: “We only knew about this a week ago and have rushed off a letter to the German government, because they are drawing up a new corporate governance code.
“The letter is asking the authorities to at least make it a point of good practice to put these poison pill decisions to shareholders.”

She says she believes the German government may be finalising its corporate governance plans today, noting: “It will be interesting to see if we’ve had any impact.”

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