Hostile takeover bids and the options available to directors in responding to them continue to be a hotly debated issue, with different jurisdictions taking different approaches. Based on the historical experience in the UK of measures taken by target company directors to frustrate unwanted takeover bids and the economic theory of the "market for corporate control", the City Code on Takeovers and Mergers has included a rule strictly prohibiting the directors of a target company from taking any action that could frustrate a bid without the prior approval of shareholders. Recently, the Takeover Panel amended this rule for the first time. This essay examines the recent amendments and discusses whether this rule can be justified in the future.
Inhaltsverzeichnis (Table of Contents)
- 1 INTRODUCTION
- 2 THE NON-FRUSTRATION RULE IN THE CITY CODE ON TAKEOVERS AND MERGERS
- 2.1 SCOPE OF RULE 21.1
- 2.2 DEFENSIVE MEASURES
- 2.3 RECENT AMENDMENTS
- 3 FUTURE JUSTIFICATION OF THE NON-FRUSTRATION RULE
- 3.1 MARKET FOR CORPORATE CONTROL
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This essay examines the recent amendments to the Non-Frustration Rule (NFR) in the City Code on Takeovers and Mergers, analyzing whether Rule 21.1 can be justified in the future. The main focus is on understanding the rationale behind the NFR, particularly in light of criticisms surrounding its economic assumptions and potential conflict with directors' duties. It also explores the extent to which the NFR adequately considers stakeholder interests.
- The historical background and development of the NFR
- The scope and application of the NFR in the UK context
- The rationale behind the NFR, particularly the economic theory of the market for corporate control
- Criticisms of the NFR and its underlying assumptions
- The potential implications of the NFR for stakeholders
Zusammenfassung der Kapitel (Chapter Summaries)
Chapter 1 introduces the concept of hostile takeover bids and the development of the NFR in the City Code. It highlights the historical context and the role of the Code in regulating takeovers.
Chapter 2 provides a detailed analysis of the NFR as it stands in the current Code. It examines the scope of Rule 21.1, discusses various defensive measures taken by target companies, and analyzes the recent amendments made to the NFR. The chapter sheds light on the rationale behind the NFR and the limitations it imposes on directors' actions.
Chapter 3 delves into the future justification of the NFR, exploring whether the rule remains valid given the changing economic landscape and evolving legal frameworks. The chapter specifically examines the economic theory of the market for corporate control and the potential conflict between the NFR and directors' duties under the Companies Act 2006.
Schlüsselwörter (Keywords)
The essay focuses on the Non-Frustration Rule (NFR) within the City Code on Takeovers and Mergers. It examines key concepts like hostile takeover bids, defensive measures, the market for corporate control, directors' duties, and stakeholder interests. The analysis aims to provide a comprehensive understanding of the NFR, its impact on corporate governance, and its future relevance in the UK context.
- Citar trabajo
- Anonym (Autor), 2024, The Non-Frustration Rule under the City Code on Takeovers and Mergers. An Assessment of the Recent Amendments and its Future Justification, Múnich, GRIN Verlag, https://www.grin.com/document/1502678
