The equal opportunity principle in Australian takeover law and practice: time for review?

Article


Mayanja, James. 2000. "The equal opportunity principle in Australian takeover law and practice: time for review?" Australian Journal of Corporate Law. 12 (1), pp. 1-19.
Article Title

The equal opportunity principle in Australian takeover law and practice: time for review?

ERA Journal ID37186
Article CategoryArticle
Authors
AuthorMayanja, James
Journal TitleAustralian Journal of Corporate Law
Journal Citation12 (1), pp. 1-19
Number of Pages19
Year2000
Place of PublicationSydney, Australia
ISSN1037-4124
Abstract

Fairness, upon which the equal opportunity rule presently governing the distribution of the takeover premium is predicated, is not the most appropriate criterion for making policy choices for Australian takeover law and practice. Pursuit of equal treatment in every takeover transaction has the potential to reduce the incidence, or success, of hostile takeover bids. Given the important role that the hostile takeover process plays in ensuring the quality of corporate management and the efficient allocation of resources within industries, a reduction in takeover activity is likely to leave shareholders and society as a whole worse off. There is thus need to review the requirement of mandatory equal treatment. In undertaking this task, policy makers would serve the interests of investors in public companies and the economic order of society generally better if they adopted shareholder and social welfare enhancement as the criterion for developing the applicable rule in this area. That criterion is likely to facilitate more hostile takeover activity, thus leaving everyone better off. This article explores ways in which the law could be reformed to achieve this objective.

Keywordshostile takeovers; market for corporate control; control premium; equal opportunity
ANZSRC Field of Research 2020480103. Corporations and associations law
440709. Public policy
500102. Business ethics
Public Notes

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Byline AffiliationsBusiness
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