Reforming Australia's takeover defence laws: what role for target directors? A reply and extension

Article


Mayanja, James. 1999. "Reforming Australia's takeover defence laws: what role for target directors? A reply and extension." Australian Journal of Corporate Law. 10 (2), pp. 162-191.
Article Title

Reforming Australia's takeover defence laws: what role for target directors? A reply and extension

ERA Journal ID37186
Article CategoryArticle
Authors
AuthorMayanja, James
Journal TitleAustralian Journal of Corporate Law
Journal Citation10 (2), pp. 162-191
Number of Pages30
Year1999
Place of PublicationSydney, Australia
ISSN1037-4124
Abstract

The thrust of this article is that the objective of preventing directors from frustrating hostile takeover offers cannot be fully realised under the proposed reform. By allowing directors freedom to continue 'conducting the ordinary business of the company', in the face of an unsolicited takeover attempt, the proposed reform confers wide discretion on the directors to block any takeover bid unacceptable to them. There is no means of identifying intransigent resistance from honest efforts by the directors to manage the business of the company. In order to protect the hostile takeover process more effectively, the proposed reform needs to be refined to spell out with more certainty the proper role of directors in contests for corporate control. The governing rule should explicitly require the directors of a company that is, or is likely to be, the target of a hostile takeover bid to desist from taking any action which may have the foreseeable effect of blocking the offer without the prior consent of the offeree shareholders. Drawing on the experience of several overseas jurisdictions, this article explores ways in which the law could be reformed to attain this objective.

ANZSRC Field of Research 2020480103. Corporations and associations law
440709. Public policy
500102. Business ethics
Byline AffiliationsSchool of Law
Institution of OriginUniversity of Southern Queensland
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