Takeovers, Poison Pills and Protectionism in Comparative Corporate Governance

Abstract

The regulation of hostile takeovers constitutes an interesting corporate governance microcosm. It is an area where clear contrasts in approach, regarding the balance of power between shareholders and the board of directors, are evident across different jurisdictions. Takeovers also refl ect the dynamic operation of legal regulation (which includes the strategic responses of regulated parties themselves), and the growing tension between globalization and protectionism. This paper analyses the regulation of hostile takeovers across a number of Western and Asian jurisdictions. First, the paper discusses the rise of takeovers and takeover defences in the United States. Against this backdrop, it examines recent developments in some other common law jurisdictions, such as the United Kingdom and Australia. It also raises the experience of the European Takeover Bid Directive, which Professor Hopt has described as “sobering”, in view of the large number of members states adopting a protectionist stance towards the directive’s implementation. The theme of protectionism in takeovers is continued in discussion of takeovers and takeover defences in relation to two major Asian economies, Japan and China. As the paper shows, in spite of the apparent promise of open capital markets offered by globalization, protectionism is on the rise internationally and takeovers play a central role in this evolving story.