The European Takeover Directive: A US Comparison
Posted: 3 Jul 2012 Last revised: 14 Jul 2012
Date Written: July 3, 2012
Although the corporate laws of the United States and the European Union have converged in recent decades, their respective laws regulating takeovers remain quite dissimilar. Under US law, directors have almost unfettered power in the takeover context and can implement powerful defenses to deter bidders. The broad grant of authority to US directors is diametrically opposite to the approach taken by the Takeover Directive due to the inclusion of, among other provision, the board neutrality rule. The difference in approach towards takeover regulation reflects philosophical differences about how to regulate the market for corporate control and how to define the interest of the company, and may have implications for the role of corporations in sustainable development. This paper describes in broad overview the US approach toward takeover regulation highlighting differences in approach between US law and the Takeover Directive. It suggests that US law allows but does not require directors to define company interest expansively so as to support the goal of sustainable development.
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