DOCSLIB.ORG

University of London Thesis

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text

Load more

REFERENCE ONLY UNIVERSITY OF LONDON THESIS Degree p K o Year l o o H Name of Author C C C ( ^ COPYRIGHT This is a thesis accepted for a Higher Degree of the University of London. It is an unpublished typescript and the copyright is held by the author. All persons consulting the thesis must read and abide by the Copyright Declaration below. COPYRIGHT DECLARATION I recognise that the copyright of the above-described thesis rests with the author and that no quotation from it or information derived from it may be published without the prior written consent of the author. LOANS Theses may not be lent to individuals, but the Senate House Library may lend a copy to approved libraries within the United Kingdom, for consultation solely on the premises of those libraries. Application should be made to: Inter-Library Loans, Senate House Library, Senate House, Malet Street, London WC1E 7HU. REPRODUCTION University of London theses may not be reproduced without explicit written permission from the Senate House Library. Enquiries should be addressed to the Theses Section of the Library. Regulations concerning reproduction vary according to the date of acceptance of the thesis and are listed below as guidelines. A. Before 1962. Permission granted only upon the prior written consent of the author. (The Senate House Library will provide addresses where possible). B. 1962 - 1974. In many cases the author has agreed to permit copying upon completion of a Copyright Declaration. C. 1975 - 1988. Most theses may be copied upon completion of a Copyright Declaration. D. 1989 onwards. Most theses may be copied. This thesis comes within category D. copy has been deposited in the Library of copy has been deposited in the Senate House Library, Senate House, Malet Street, London WC1E 7HU. C:\Documents and Settings\lproctor\Local SettingsYTemporary Internet Files\OLK8\Copyright - thesis (2).doc MINORITY SHAREHOLDER PROTECTION IN TAKEOVERS: PRIVATE ACTIONS by Joseph C H Lee PhD Thesis Institute of Advanced Legal Studies University of London 2005 UMI Number: U215461 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U215461 Published by ProQuest LLC 2013. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 DECLARATION I declare that the work presented in this thesis is my own. London November, 2004 1 ABSTRACT Minority Shareholder Protection in Takeovers: Private Actions PhD Thesis, Institute of Advanced Legal Studies by Joseph C H Lee There are limits on minority shareholders’ rights to initiate proceedings against the controllers (directors or controlling shareholders or both) of the company. Minority shareholders have traditionally only had rights of action on grounds of fraud on the minority, and directors’ illegal, and ultra vires acts. Minority shareholders have been deprived of the opportunity to have their grievances heard by the courts in takeover situations. This lowers the threshold of accountability of the controllers. Alternative models of control and accountability, the internal control model, the market control model, and the regulatory model, do not provide sufficient protection of minority shareholders’ legitimate expectations in takeover situations. Courts in England have been reluctant to recognise that the controllers of the company owe a fiduciary duty to the minority shareholders where change of corporate control is in question. Although statutes were passed in order to remedy the inadequate protection of minority shareholders, the judicial interpretation of these statutes imposes restrictions on the rights of minority shareholders to initiate court actions. The remedies available to minority shareholders are limited to the buy-out remedy often combined with a conservative approach in share valuation. Experience in other jurisdictions shows how shareholders there are entitled to a broader range of remedies in takeover situations. In England, however, neither the Human Rights Act 1998 nor the European Directive on takeover bids are likely to bring about significant changes in the range and scope of the judicial remedies available to minority shareholders. This thesis advocates the development of a private action model in English law. It argues that the area of fiduciary duties owed by the controllers of the company to the minority shareholders should be expanded. In a takeover situation, where change of control is in question, those who exercise actual control over the company should owe a duty to the minority shareholders to act fairly so as not to harm their legitimate interests and expectations. Furthermore, this thesis makes recommendations for the introduction of a pre-action protocol for shareholders disputes and the relaxation of the law on contingency fee arrangements in contentious matters. 2 TABLE OF CONTENTS Table o f Cases...................................................................................................................12 Table o f Treaties and Legislation..................................................................................... 23 CHAPTER I INTRODUCTION AND METHODOLOGY A. THE PROBLEM....................................................................................................... 28 B. SOCIOLOGICAL PERSPECTIVE........................................................................ 30 C. THE THEORETICAL BASES FOR THE PROTECTION OF MINORITY SHAREHOLDERS........................................................................................................ 34 D. FOUR MODELS OF CONTROL IN TAKEOVERS.............................................42 1. Internal Control Model ....................................................................................... 42 2. Regulatory Control Model................................................................................. 44 3. Market-mechanism Control Model .................................................................... 46 4. Private Action Model ........................................................................................... 49 E. STRUCTURE OF THE ANALYSIS....................................................................... 50 CHAPTER II CORPORATE CONTROL AND TAKEOVER A. INTRODUCTION..................................................................................................... 54 B. DEFINITIONS OF CORPORATE CONTROL.....................................................55 C. CATEGORIES OF CORPORATE CONTROL.................................................... 63 1. Family Control..................................................................................................... 63 2. State Control ........................................................................................................ 65 3. Stockholder Control............................................................................................ 67 4. Cross-holding Control......................................................................................... 68 3 5. Minority Control.................................................................................................. 69 6. Management Control ........................................................................................... 70 7. Committee Control .............................................................................................. 72 8. Supervisory Board Control.................................................................................73 9. Creditor Control.................................................................................................. 74 10. Coalition Control ............................................................................................... 75 D. CONSTRAINT.......................................................................................................... 77 E. LEGAL CONSTRAINTS ON CORPORATE CONTROL....................................81 F. DISADVANTAGES OF TAKEOVER...................................................................... 85 a ADVANTAGES OF TAKEOVER ............................................................................ 89 H. CONCLUSION.......................................................................................................94 CHAPTER III METHODS OF TAKEOVER A. INTRODUCTION.....................................................................................................96 B. TENDER OFFER......................................................................................................97 C. SHARE-FOR-SHARE BID FOR ALL..................................................................102 D. REVERSE BID........................................................................................................ 105 E. OFFER BY THE NEW COMPANY......................................................................106 F. OFFER BY SUBSIDIARY OR ASSOCIATED COMPANY.............................. 107 G. MANAGEMENT BUY-OUT.................................................................................108 H. PRIVATE SALE OF SHARES..............................................................................109
Recommended publications
  • SUMMARY Introduction the Fiduciary Position of Directors to Whom Do Directors Owe T

    SUMMARY Introduction the Fiduciary Position of Directors to Whom Do Directors Owe T

    14 Directors’ duties <start feature> SUMMARY Introduction The fiduciary position of directors To whom do directors owe their duties? The general duties of directors: CA 2006, Part 10 Remedies Accessory liability Relief from liability <end feature> Introduction 14.1 In this chapter we consider the duties which a director owes to the company. In Chapter 13 we explained that directors are fiduciaries and so much of the case law on their duties is founded on principles originating from the law of trusts and agency. We also saw that the early part of the 20th century marked a significant shift in the way the judges viewed the office of director. In tandem with this development the courts adopted a stricter approach towards the standard of care and skill expected of directors in the performance of their management roles. A concern of both equity and common law courts was to develop a corpus of rules designed to prevent directors abusing their considerable powers. The policy objective is based on prophylaxis and the result is a formidable body of reported decisions in which the judges have been developing the contours of directors’ liabilities. In addition to the work of the courts, legislation has also imposed a range of duties, devised principally as reactive measures against specific abuses by directors, particularly in relation to fraudulent asset stripping. Confronted with this considerable body of law, it came as little surprise that the Company Law Review (CLR), in line with its objectives of maximising clarity and accessibility, recommended that the duties of directors should be codified by way of a 1 statutory restatement.
  • The Codification of Directors' Duties: Capturing the Essence of The

    The Codification of Directors' Duties: Capturing the Essence of The

    Corporate Board: role, duties & composition / Volume 2, Issue 2, 2006 THE CODIFICATION OF DIRECTORS’ DUTIES: CAPTURING THE ESSENCE OF THE CORPORATE OPPORTUNITY DOCTRINE John Lowry* * Professor of Law, University College London. I owe a debt of gratitude to Lucinda Miller for her comments on this article. All errors are my own. I also thank Rod Edmunds for his help in preparing an earlier version of this article. 1. The mechanics of the UK company law The mechanism which the DTI put in place for reform process undertaking the reform exercise was devised to maximise “openness and independence” together 5 In March 1997 the UK Government announced with ensuring wide consultation. The review was what was potentially the most far-reaching review administratively independent from the DTI. The of company law since Gladstone’s Joint Stock Company Law Review Steering Group (hereafter Companies Act 1844 and the introduction of limited the CLR), which stood at centre stage in the reform 1 liability in 1855. In her Foreword to the first process, was charged with ensuring that the consultation document which formally launched the review’s outcome is “clear in concept, internally 2 review, Margaret Beckett, then President of the coherent, well articulated and expressed, and 6 Board of Trade, noted that the current company law workable.” The Steering Group’s consultation 7 regime is a complex regulatory amalgam founded exercise was comprehensive, and its Final Report upon mid-19th century legislation as amended over was presented to the Secretary of State for Trade the intervening century and a half by numerous and Industry on 26 July 2001.
  • The Implementation and Balancing of Interests Between Board of Directors

    The Implementation and Balancing of Interests Between Board of Directors

    UNIVERSITY OF RWANDA COLLEGE OF ARTS AND SOCIAL SCIENCES SCHOOL OF LAW LLM IN BUSINESS LAW PROGRAMME TOPIC: THE IMPLEMENTATION AND BALANCING OF INTERESTS BETWEEN BOARD OF DIRECTORS AND SHAREHOLDERS OF THE COMPANY UNDER RWANDAN LAW Thesis submitted in partial fulfillment of academic requirements for the award of the Master‟s Degree in Business Law By TURINOMUJUNI Mathias Registration number: 217303121 Supervisor: Dr. Didas KAYIHURA June 2020 Declaration I, ……………………………………………………, hereby divulge that the thesis entitled “THE IMPLEMENTATION AND THE BALANCING OF INTERESTS BETWEEN BOARD OF DIRECTORS AND SHAREHOLDERS OF THE COMPANY UNDER RWANDAN LAW” contains no material that has been submitted previously, in whole or in part, for the award of any other academic degree or diploma. Except where otherwise indicated, this thesis is my own work. Signature: …………………………. Date: ……. /…….. / 2020 i Dedication To the Lord the Most Merciful To my lovely Family, Wife and Children To the Legal Fraternity ii Acknowledgement I would first like to thank my thesis Supervisor Dr. Didas KAYIHURA of the School of Law at the University of Rwanda. The door to Dr. Didas‟ office was always open whenever I ran into a trouble spot or had a question about my research or writing. He consistently allowed this paper to be my own work, but steered me in the right the direction whenever he thought I needed it. I would like to thank the experts who were involved in the validation survey for this research project: Dr. Richard Karugarama and Dr. Yves Muhire at the School of law at the University of Rwanda. Without their passionate participation and input, the validation assessment could not have been successful.