- Question ID
- Legal act
- Directive 2014/59/EU (BRRD)
- Resolution tools and powers
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Type of submitter
- Subject matter
Relation between the sale of business tool and take-over bid requirements
Does the reference to 'securities law' in Article 38(1) of Directive 2014/59/EU (BRRD) relate to take-over bid requirements? In general, what is the approach to the exemption to apply securities law requirements? For example, in case of bail-in in for the conversion into capital instruments an alternative in given, and therefore the investor has to decide between two instruments but the conversion is mandatory, could the obligation of prospectus be overridden? The same for a capital increase with pre-emption rights?
- Background on the question
Article 38(1), last paragraph, states that : "Subject to paragraphs 8 and 9 of this Article and to Article 85, the transfer referred to in the first subparagraph shall take place without obtaining the consent of the shareholders of the institution under resolution or any third party other than the purchaser, and without complying with any procedural requirements under company or securities law other than those included in Article 39".
- Submission date
- Final publishing date
- Final answer
Article 38 of Directive 2014/59/EU (BRRD) requests that resolution authorities have the powers to transfer shares, assets, rights and liabilities of the institution under resolution to a purchaser that is not a bridge; and this without complying with procedural requirements under company or securities law other than those in Article 39.
The question is whether take-over bids requirements and prospectus obligations are set aside by virtue of the reference to "company and securities laws". Take-over bid requirements are within the concept of company law. Indeed, the 13th company law Directive is Directive 2004/25 on take-over bids which is set aside in case of the use of resolution tools and powers by virtue of Article 119 of the BRRD which amends the take-over bids Directive.
As regards the prospectus obligations, BRRD does not amend expressly the prospectus Directive (2003/71 as amended by 2010/73) unlike it does with other EU legislation. Therefore, in principle, both sets of provisions apply. However, the prospectus Directive may not be relevant in the situation described: the prospectus Directive relates to public offering or admission to trading, and in a situation where there is a mandatory conversion of the creditors there is no public offering or admission to trading in that interim. More generally, the set aside of procedural requirements of "company and securities law" as per Article 38 (1) should not be read in the absolute but rather be looked at against the rationale of that provision, which is to avoid obstacles to effective and timely resolution.
Disclaimer: This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.
- Answer prepared by
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
- Note to Q&A
Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Directive 2014/59/EU (BRRD) and continues to be relevant.