Directive on the supervisory assessment of acquisitions in the financial sector (“Acquisition Directive”)

On 27 March 2007, under Germany's Council presidency, the Economic and Financial Affairs Council of the European Union reached a political agreement on the Directive on the supervisory assessment of acquisitions and increases in holdings in the financial sector. The EU Finance ministers approved the measure, which had been amended by the European Parliament in its first reading; the formal adoption of the Directive (without further debate) will take place at one of the next meetings of the Council.

The Directive will streamline the criteria and timescale of the assessment procedure applied by European supervisory authorities in cases where qualifying holdings are acquired in the financial sector.

With the aid of clear, pan-European harmonised rules for supervisors, protectionist barriers will be removed and mergers and acquisition of shareholdings will be encouraged in the EU financial sector. The new EU rules increase transparency and thus offer legal certainty for the enterprises involved by more precisely defining the individual steps of the procedure. The Directive equally affects the banking, insurance and securities sectors.

The adoption of this Directive under Germany's presidency is a decisive step towards strengthening European competitiveness in particular by promoting cross-border consolidation and is a great success for the increasing EU financial market integration.

After only seven months, the European Parliament, Commission and the Council have reached agreement on the following main points:

• Setting clear time limits for the various steps of the prudential assessment procedure: The assessment period is limited to a maximum of 60 working days. This period can be interrupted only once, to procure additional documentation: for EU purchasers for a maximum of 20 working days and for purchasers from third countries for a maximum of 30 working days.
• EU supervisory authorities will be supplied with a definitive checklist of five concrete criteria, including the reputation and financial soundness of the proposed acquirer, management experience, consistent compliance with the sectoral prudential rules and suspicious circumstances pointing to money laundering and financing of terrorism.
• Each Member State will publish a list of the information which must be submitted with the application.
• The competencies among the supervisory authorities are clearly assigned: the supervisors will work together closely on cross-border cases; the right of final decision will remain with the supervisory authority responsible for the enterprise which is to be taken over.
• Subject to the legal rules of the individual state, a negative decision by the supervisory authority may be made available to the public.
• A (controversial) rule which would have given the Commission the right to examine the files of an individual case was dropped.
• Two years after the implementation of the Directive, the Commission will review, together with the Member States, the application of the Directive and draw up a report, which it will present to the European Parliament and the Council with any appropriate proposals.

After the Directive formally passes in the Council, it will enter into force on the day of its publication in the Official Journal of the European Union.