Author: Clas BergströmPublisher:
ISBN:
Category :
Languages : en
Pages : 34
Book Description
The Optimality of the Mandatory Bid Rule
Author: Clas BergströmThe Mandatory Bid Rule
Author: Edmund SchusterPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
The mandatory bid rule has its origins in the UK and now applies throughout the EU and in many other jurisdictions. Under a mandatory bid, an acquirer of a controlling stake in a listed company has to offer to the remaining shareholders a buy-out of their minority stakes at a price equal to the consideration received by the incumbent controller. While the rule warrants that no value-destroying control transfers take place, it is often criticised for preventing value-increasing transactions. This paper challenges some of the claims made by critics of mandatory bids. Highlighting the effects of synergy gains in private sale-of-control transactions, it is shown that mandatory bids prevent inefficient control transfers, where minority shareholder protection rules provide inadequate protection. Furthermore, mandatory bids help facilitate transfers to the most efficient bidders in multi-bidder settings. The mandatory bid is justifiable, on economic grounds, in wider circumstances than is commonly assumed by law and economics scholars.
An Analysis of the Mandatory Bid Rule
Author: Clas BergströmPanacea Or Wisdom Tooth? Assessing the Misconstrued Mandatory Bid Rule
Author: Charlie WengPublisher:
ISBN:
Category :
Languages : en
Pages : 34
Book Description
The Mandatory Bid Rule (MBR) requires a bidder who acquires control over a firm to make a general offer to all remaining shareholders to purchase their residual shares. It is the most powerful institution that requires controlling shareholders to share the control premium with other shareholders in a control transaction. The MBR is considered to be a key method of protection for minority shareholders but faces strong criticism over high implementation costs and on-going debate over its effectiveness in practice.From a utilitarianism perspective, the paper shows the relevance between the MBR and the effectiveness of minority shareholder protection mechanisms in a jurisdiction of legal transplantation. Using Mainland China as the test sample where the MBR was adopted, removed then re-introduced, the paper employs the empirical research methodology to highlight market reactions when the rule is removed. The paper analyzes the efficiency of the MBR and outlines the types of environments and jurisdictional specifications where the MBR can operate at an optimal level, and alternatively, where the MBR will not be value-maximizing. It offers ideal legislation suggestions for similar jurisdictions considering transplanting MBR.
Mandatory Bid Rule as a Cornerstone of the EU Takeover Market
Author: Dmitry KuzminComparative Takeover Regulation
Author: Umakanth VarottilPublisher: Cambridge University Press
ISBN: 1107195276
Category : Business & Economics
Languages : en
Pages : 545
Book Description
Comparative Takeover Regulation compares the laws relating to takeovers in leading Asian economies and relates them to broader global developments. It is ideal for educational institutions that teach corporate law, corporate governance, and mergers and acquisitions, as well as for law firms, corporate counsel and other practitioners.
The Mandatory Bid Rule in the Proposed EC Takeover Directive
Author: Luca EnriquesPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
According to the new proposal for an EC takeover directive, anyone acquiring control of a listed company is required to make a bid, to be addressed to all holders of securities for all their holdings at a price at least equal to the highest price paid in the period preceding the acquisition, unless an exemption or a discount on price is granted by the supervisory authority. This paper provides an analysis of the mandatory bid rule as devised in the directive proposal and assesses whether there is a case for an EC rule of this kind. Five possible rationales are identified for the mandatory bid rule: the level playing field, the protection of minority shareholders, equality of treatment, companies' lower cost of capital, and efficiency and integration of European capital markets. Drawing from well-established economic analysis on transfers of control and the effects of the mandatory bid rule, the paper finds that harmonized rules such as those provided for in the proposal do not level the playing field and cannot be justified on this ground alone, have dubious effects on minority shareholders' welfare as a class and on firms' cost of capital, have no legal justification in terms of equal treatment, and can possibly be justified as rules enhancing the efficiency and integration of European capital markets, if other institutional arrangements such as low levels of enforcement of directors' duty of loyalty and the unavailability of the poison pill are taken into account. The paper concludes that certainly well-identified interest groups will gain from an EC mandatory bid rule provision. Corporate managers (and blockholders retaining working control) of widely-held European companies stand to gain from such provision, as it makes hostile takeovers more costly. Even more importantly, policymakers and supervisory agency officials, to whom great power and discretion are granted in deciding whether the mandatory bid rule applies and what its price should be, are going to gain from its introduction. Finally, those providing advisory services in the market for corporate control, and above all lawyers specializing in mergers and acquisitions, stand to gain from having in place an EC mandatory bid rule.
The Anatomy of Corporate Law
Author: Reinier KraakmanPublisher: Oxford University Press
ISBN: 0191059536
Category : Law
Languages : en
Pages : 305
Book Description
This is the long-awaited third edition of this highly regarded comparative overview of corporate law. This edition has been comprehensively revised and updated to reflect the profound changes in corporate law and governance practices that have taken place since the previous edition. These include numerous regulatory changes following the financial crisis of 2007-09 and the changing landscape of governance, especially in the US, with the ever more central role of institutional investors as (active) owners of corporations. The geographic scope of the coverage has been broadened to include an important emerging economy, Brazil. In addition, the book now incorporates analysis of the burgeoning use of corporate law to protect the interests of "external constituencies" without any contractual relationship to a company, in an attempt to tackle broader social and economic problems. The authors start from the premise that corporations (or companies) in all jurisdictions share the same key legal attributes: legal personality, limited liability, delegated management, transferable shares, and investor ownership. Businesses using the corporate form give rise to three basic types of agency problems: those between managers and shareholders as a class; controlling shareholders and minority shareholders; and shareholders as a class and other corporate constituencies, such as corporate creditors and employees. After identifying the common set of legal strategies used to address these agency problems and discussing their interaction with enforcement institutions, The Anatomy of Corporate Law illustrates how a number of core jurisdictions around the world deploy such strategies. In so doing, the book highlights the many commonalities across jurisdictions and reflects on the reasons why they may differ on specific issues. The analysis covers the basic governance structure of the corporation, including the powers of the board of directors and the shareholder meeting, both when management and when a dominant shareholder is in control. It then analyses the role of corporate law in shaping labor relationships, protection of external stakeholders, relationships with creditors, related-party transactions, fundamental corporate actions such as mergers and charter amendments, takeovers, and the regulation of capital markets. The Anatomy of Corporate Law has established itself as the leading book in the field of comparative corporate law. Across the world, students and scholars at various stages in their careers, from undergraduate law students to well-established authorities in the field, routinely consult this book as a starting point for their inquiries.
The Anatomy of Corporate Law
Author: Reinier H. KraakmanPublisher: Oxford University Press, USA
ISBN: 9780199260645
Category : Business & Economics
Languages : en
Pages : 250
Book Description
This overview starts from the premise that corporate law across jurisdictions addresses the same three basic agency problems - the opportunism of: managers vis-a-vis shareholders; controlling shareholders vis-a-vis minority shareholders; and shareholdersvis-a-vis other corporate constituencies.
Stanford Law Review: Volume 63, Issue 3 - March 2011
Author: Stanford Law ReviewPublisher: Quid Pro Books
ISBN: 1610270592
Category : Law
Languages : en
Pages : 388
Book Description
This March 2011 issue of the Stanford Law Review contains studies of law, economics, and social policy by recognized scholars on such diverse topics as "preglimony," derivatives markets in a fiscal crisis, corporate reform in Brazil, land use and zoning under contract theory, and a student Note on college endowments at elite schools during a time of economic downturn. Contents for the March 2011 issue are: "Regulatory Dualism as a Development Strategy: Corporate Reform in Brazil, the U.S., and the E.U.," by Ronald J. Gilson, Henry Hansmann and Mariana Pargendler "The Derivatives Market's Payment Priorities as Financial Crisis Accelerator," by Mark J. Roe "The Contract Transformation in Land Use Regulation," by Daniel P. Selmi "Preglimony," by Shari Motro Note, "Scarcity Amidst Wealth: The Law, Finance, and Culture of Elite University Endowments in Financial Crisis" In the ebook editions, the footnotes, graphs, and tables of contents (including those for individual articles) are fully linked, properly scalable, and functional; the original note numbering is retained; URLs in notes are active; and the issue is properly formatted.