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  • Cited by 2
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    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Nyombi, Chrispas 2015. A critique of shareholder primacy under UK takeover law and the continued imposition of the Board Neutrality Rule. International Journal of Law and Management, Vol. 57, Issue. 4, p. 235.


    Muth, Karl T and Trees, Hans 2010. Giuoco Piano:The Acquiree’s Dilemma. The Journal of Private Equity, Vol. 14, Issue. 1, p. 25.


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  • International and Comparative Law Quarterly, Volume 56, Issue 2
  • April 2007, pp. 267-307

The Illusion of Importance: Reconsidering the UK'S Takeover Defence Prohibition

Abstract
Abstract

This article considers the significance of the UK Takeover Code's non-frustration prohibition. It asks to what extent the prohibition actually prevents post-bid, director-controlled defences that would not have been, in any event, either formally prohibited by UK company law without share-holder approval or practically ineffective as a result of the basic UK company law rule set. It finds that there would be minimal scope for director-deployed defences in the absence of the non-frustration prohibition, and that, in the context of UK company law, such defences have limited scope to be deployed for entrenchment purposes. Furthermore, this minimal scope for board defensive action would, in order to be compliant with a director's duties, require a pre-bid, shareholder-approved alteration to the UK's default constitutional balance of power between the board and the shareholder body to allow corporate powers to be used for defensive effect. In light of this conclusion the article looks for a rationale to justify denying shareholders the right to make this limited and potentially beneficial defensive election. It concludes that no persuasive rationale is available and that the prohibition is unnecessary and without justification.

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M Gatti , ‘Optionality Arrangements and Reciprocity in the European Takeover Directive’(2005) 6 European Business Organization Law Review 553, 561

L Bebchuk , ‘The Case Against Board Veto in Corporate Takeovers’ (2002) 69 The University of Chicago Law Review 973, 1027

B Black and JC Coffee , ‘Britannia: Institutional Investor Behavior Under Limited Regulation’ (1994) 92 Michigan Law Review 1997.

G Subramanian , ‘Bargaining in the Shadow of Takeover Defenses’ (2003) 113 Yale Law Journal 621, 654.

L Bebchuk , J Coates IV, and G Subramanian , ‘The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence and Policy’ (2002) 54 Stanford Law Review 887, 944.

M Klausner , ‘Institutional Investors, Private Equity and Anti-takeover Protection at the IPO Stage’ (2003) 152 University of Pennsylvania Law Review 755, 760.

J Coffee , ‘Regulating the Market for Corporate Control: a Critical Assessment of the Tender Offer's Role in Corporate Governance’ (1984) 84 Columbia Law Review 1145, 1202–3).

J Franks and C Mayer , ‘Hostile Takeovers in the UK and the Correction of Managerial Failure’ (1996) 40 Journal of Financial Economics 163, 180.

RA Heron and E Lie , ‘On the Use of Poison Pills and Defensive Payouts by Takeover Targets’ (2006) 79 Journal of Business 1783.

L Dann and H De Angelo , ‘Corporate Financial Policy and Corporate Control’ (1988) 20 Journal of Financial Economics 87.

GA Jarrell , JA Brickley , and JA Netter , ‘The Market for Corporate Control: the Empirical Evidence Since 1980’ (1988) 2 Journal of Economic Perspectives 49.

MG Danielson and JM Karpoff , ‘Do pills poison operating performance’ (2006) 12 Journal of Corporate Finance 536, 552.

see M Gordon , ‘Takeover Defenses Work. Is That Such a Bad Thing?’ (2002) 55 Stanford Law Review 819, 823, 837.

LA Bebchuk , JC Coates , and G Subramanian , ‘The Powerful Antitakeover Force of Staggered Boards: Further Findings and a Reply to Symposium Participants’ (2002) 55 Stanford Law Review 855, 906–8.

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International & Comparative Law Quarterly
  • ISSN: 0020-5893
  • EISSN: 1471-6895
  • URL: /core/journals/international-and-comparative-law-quarterly
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