Introduction

Today, takeovers of publicly held business firms are understood as an effective and speedy means of resource allocation. Yet the legal framework surrounding takeovers, particularly hostile ones, is not simple. It appears to vary significantly from country to country.

With regard to takeover defences, the United States is rich both in its practical experience and academic literature. In contrast, Japan was poor at least until 2005. While courts in Delaware in the United States have shaped the law in this area over the past twenty-five years, Japanese law is not clear despite the existence of several statutory provisions of the Japanese Company Act and certain well-known cases in recent years. Although the United States is rich in its practical experience and academic literature, evidence seems to be inconclusive. Moreover, there is so much debate among commentators that opinions are quite divided among reasonable people. As a result, this area has produced (and still today produces) one of the most difficult issues in US corporate law. First, while empirical studies generally show that hostile takeovers are good for the economy in the sense that they generally enhance the value of the target firms, it is unclear from the past empirical studies whether defence measures adopted by target boards, in particular ‘poison pills’, are good or bad for the target firms (and thus for the economy).