Reform, Financial Systems and Legal Frameworks
The CRC Series on Competition, Regulation and Development
Edited by Thankom Gopinath Arun and John Turner
Chapter 9: Corporate Governance Regulation and Board Decision Making During Takeovers
Blanaid Clarke INTRODUCTION This chapter examines the legal and regulatory framework which applies to the provision of advice by directors of a target company to shareholders during a takeover bid. Adopting a regulatory perspective, it considers whether this framework functions effectively. Regulation stems from initiatives both at EU level and at national level. Reconciling and bedding down these different initiatives has not always proven easy. Three points may be made in this regard. First, each market is different in terms of ownership patterns, structure and stage of development of the securities market, availability of finance, importance and role of the banking sector, socio-economic influences and political cultures. In addition, the regulation of takeovers falls within the remit of different types of bodies in different Member States each with their own particular structures, agendas, experiences and powers. Consequently, the task of agreeing harmonizing regulation, which can operate efficiently within each of these different marketplaces, has proven difficult. The European Commission’s response to this challenge has been to adopt what might be viewed as a light regulatory touch. Second, takeover law (either nationally or at an EU level) is not in itself a coherent body of law in the way that one might describe constitutional or tort law. It has many different areas feeding into it such as company law, securities law, contract law and, of particular relevance to this chapter, corporate governance. Each area has its own specific norms, objectives, policies and regulatory mechanisms and these too vary from Member State...
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