Redirecting State Takeover Laws at Proxy Contests
Wisconsin Law Review, Vol. 1992, No. 4, p. 1071, 1992
76 Pages Posted: 25 May 2010
Date Written: May 25, 2010
During the 1980s, many states adopted statutes intended to regulate corporate takeovers. The Supreme Court validated one of these statutes, The Indiana Control Shares Acquisition Statute, in CTS Corp. v. Dynamics Corp., 481 U.S. 69 (1987), against both preemption and commerce clauses challenges. Since CTS, state takeover laws have routinely withstood constitutional scrutiny, even though it is generally acknowledged that, by erecting new barriers to hostile tender offerors, they make tender offers less attractive.
At the time this article was published (1992), proxy contests were becoming an increasingly important component of hostile takeover battles. Today, of course, proxy contests and various other forms of shareholder activism have become a common feature of the corporate governance scene.
This article considered whether state laws designed to regulate proxy contests would withstand constitutional scrutiny. It surveys whether such laws would be preempted by the federal proxy rules or the Williams Act’s tender offer regulations. It also briefly touches upon the Commerce Clause aspects of any such challenge. The article concludes that state regulation of proxy contests should withstand constitutional challenge.
Keywords: proxy contest, preemption, commerce clause, takeovers, proxy, constitution
JEL Classification: K22
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Corporate Governance and Shareholder Initiatives: Empirical Evidence
By Jonathan M. Karpoff, Paul H. Malatesta, ...
Shareholder Passivity Reexamined
The Impact of Shareholder Activism on Target Companies: A Survey of Empirical Findings
Shareholder Activism and Corporate Governance in the United States
The Motivation and Impact of Pension Fund Activism
Monitoring: Which Institutions Matter?
By Kai Li, Jarrad Harford, ...
Hedge Fund Activism, Corporate Governance, and Firm Performance
Does Coordinated Institutional Activism Work? An Analysis of the Activities of the Council of Institutional Investors
By Tim C. Opler and Jonathan S. Sokobin
The Evolution of Shareholder Activism in the United States
By Stuart Gillan and Laura T. Starks
The Case for Increasing Shareholder Power