Takeover Law in Eu and the USA

by Cheng, Yin Cheong

• ISBN13: 9789041119193
• ISBN10: 9041119191
• Format: Hardcover
• Copyright: 2002-09-01
• Publisher: Kluwer Law Intl

Summary

The societal benefits of takeoversin the form of enhanced competition and productivityhave been well documented. Moreover, many scholars believe that the very possibility of a hostile takeover urges incumbent management to be more productive, thus ultimately enhancing shareholder welfare. Starting from such premises as these, Dr. Forstinger offers an in-depth comparative analysis of takeover law as it exists in the United States and as it is currently developing in Europe. The latter emphasizes the failed takeover directive of 2001, As its content is already determining new proposals currently in preparation. Among the salient topics that arise in the course of the discussion are the following: the conflicting interests of the various stakeholders-shareholders, managers, employees, creditors, governments, 'raiders', and others; the state competition question from the U.S. perspective And The prospects of a market for incorporations in the EU; the tension between harmonization and regulatory competition in context with takeover laws; and the focus on current takeover regulation in the UK, Germany and Austria. The study concludes with recommendations for reflexive harmonization of takeover law in the European Union responding To The complex needs of the diverse corporate law systems of the member states. All company lawyers and corresponding regulators--especially but not exclusively in Europe--will appreciate the clear scholarship and thought that are apparent in this very current book.

Table of Contents

Abstract	xi
List of Abbreviations	xiii
Introduction	1	(8)
Harmonization and regulatory competition	1	(1)
The research questions	2	(1)
Terminology	3	(2)
Are takeovers beneficial for the society?	5	(1)
The interest in an efficient capital market	6	(3)
Stakeholders in companies and their interests in takeovers	9	(6)
U.S. and European company law and the harmonization program of the European Union	15	(42)
U.S. company law	15	(10)
History of U.S. company law	15	(1)
Relevant constitutional principles	16	(1)
Corporation law is state law	17	(1)
Preeminence of Delaware corporation law	18	(1)
Delaware's competitive advantages	19	(1)
Network and learning externalities	20	(1)
Judicial proficiency	20	(1)
Credible commitment	21	(1)
Supermajority vote	21	(1)
Corporate governance structure in the United States	21	(1)
Internal affairs doctrine	22	(2)
Degree of uniformity of company law	24	(1)
European company law and the harmonization program of the EU	25	(32)
History of the company law harmonization program	25	(2)
The relevant provisions of the EC Treaty concerning company law harmonization	27	(3)
Is harmonization a necessity?	30	(1)
The subsidiarity principle under the Maastricht Treaty	31	(1)
The four generations of directives	32	(2)
Freedom of establishment	34	(1)
Secondary establishment	35	(1)
Primary establishment	36	(1)
Conflict of law rules restricting the freedom of establishment	36	(1)
The procedural perspective	36	(1)
The Incorporation Theory	37	(1)
The Real Seat Theory (``Siege Reel doctrine'')	38	(2)
Harmonization of national conflict of laws rules?	40	(1)
The Centros case	41	(1)
The facts of Centros	42	(1)
The findings of the European Court of Justice	42	(2)
The Real Seat Theory in an EU perspective	44	(1)
The current debate	44	(1)
The implications of the Centros case for the Real Seat Theory	45	(3)
Institutional differences	48	(1)
Comparative corporate governance: The USA and the EU	48	(4)
Diversity in European Union member states' laws	52	(5)
The state competition question	57	(14)
The state competition question from the United States experience	57	(14)
The factual background	57	(2)
The classic theories of state competition in American corporate theory	59	(1)
The race to the bottom	59	(1)
The race to the top	59	(1)
The race for predictablity and stability	60	(1)
Macey and Miller's interest group analysis	61	(1)
The limits on state competition	62	(1)
Precondition for exploring the limits on state competition Distinguishing different kinds of corporate rules	63	(1)
Managerial opportunism	64	(3)
Externalities	67	(1)
The regulation of takeover bids and the involvement of externalities	68	(3)
Takeover law under state competition	71	(76)
Introduction	71	(3)
The problem of state competition in the context of takeover laws	71	(1)
Shareholders interests versus the interests of managers	72	(1)
What is a takeover bid?	73	(1)
Takeover-laws from the U.S. perspective	74	(22)
The relationship between federal and state law concerning the regulation of takeover bids	74	(3)
Regulation of takeovers in the United States	77	(1)
Federal tender offer regulation under the Williams Act	77	(1)
Objectives of the Williams Act	77	(1)
Legislative history: purposes and policies of the Williams Act	77	(2)
Relevant statutory provisions	79	(1)
Section 14(d)	79	(1)
Section 13(d)	80	(1)
Similarities and dissimilarities of section 14(d) and 13(d)	80	(1)
Section 14(e)	81	(1)
Section 13(e)	82	(1)
Traffic rules -- procedural regulation	83	(1)
Acquiror's duty of information	83	(1)
Reasoned statement of target management	84	(1)
No ``Saturday night special''	84	(1)
Withdrawal rights	84	(1)
``Pro-ration right''	84	(1)
``Best-price rule''	85	(1)
The definition of tender offer	85	(2)
State takeover legislation	87	(1)
Brief history of state takeover legislation	87	(1)
Three stages of anti-takeover legislation	88	(1)
First generation statutes (1968-1982)	88	(1)
Second generation statutes (1982-1987)	89	(1)
Control share acquisition statutes	89	(1)
Fair price statutes	89	(1)
Cash-out statutes	90	(1)
Business combination statutes	90	(2)
Third generation statutes (since 1987)	92	(3)
Delaware and its position on takeover regulation	95	(1)
Takeover laws from the European perspective	96	(41)
The regulation of takeover laws in Europe	96	(2)
A level playing field in the EU?	98	(1)
The proposed takeover directive	99	(1)
Legislative history: Purposes and policies of the proposed takeover directive	99	(2)
Analysis of the proposed takeover directive	101	(1)
The aim of the proposed takeover directive	101	(1)
Scope of application	102	(1)
The framework approach	103	(1)
Different types of bids	104	(1)
The mandatory bid rule	104	(2)
Voluntary bids	106	(1)
Cross border listings	107	(1)
Comparative analysis of the rights and obligations of target directors -- the proposed takeover directive and the Williams Act in contrast	108	(1)
Target company's defensive actions	108	(2)
Disclosure obligations	110	(2)
Procedure	112	(2)
The rejection by the European Parliament	114	(1)
The codecision procedure	114	(1)
Why has the amended proposed takeover directive been rejected?	115	(3)
Takeover regulation by EU member states: an overview of takeover regulation in the United Kingdom, Germany and Austria	118	(1)
The United Kingdom	118	(3)
Germany	121	(1)
Barriers to acquiring control in Germany	121	(3)
Takeover regulation in Germany	124	(6)
Austria	130	(1)
Barriers to acquiring control in Austria	130	(2)
Takeover regulation in Austria	132	(5)
Takeover law under state competition	137	(10)
The philosophy of takeover regulation in the U.S. and the EU	137	(4)
Managers preferred takeover law	141	(2)
States and the incentive to restrict takeovers	143	(4)
Regulatory competition versus harmonization in European takeover law: how the appropriate way may look	147	(20)
Some observations on current issues of EU company law as precondition for examining European takeover regulation	147	(7)
Present stage of development of EU company law	147	(1)
Competing legal systems in the EU?	148	(2)
The prospects of a market for incorporations in the EU	150	(1)
A possible, but unlikely, European Delaware effect	151	(3)
EU takeover law and the tension between harmonization and regulatory competition	154	(4)
The scope for regulatory competition	154	(2)
Why full regulatory competition is not an efficient path for EU takeover law	156	(1)
The need for harmonization in EU takeover law	157	(1)
The appropriate way of regulating EU takeover law	158	(9)
Reflexive harmonization	158	(4)
An example, how reflexive harmonization may enhance shareholder choice	162	(5)
Conclusion	167	(4)
References	171	(10)
Table of Cases
U.S. cases	181	(1)
Cases of the European Court of Justice	181