Takeovers and Countering Short-Termism in Target Boardrooms

34 Company Lawyer 43 and 68 (in 2 parts) pp 1-30, (2013)

Singapore Management University School of Law Research Paper No. 42/2013

32 Pages Posted: 3 Sep 2013 Last revised: 5 Sep 2013

See all articles by Wai Yee Wan

Wai Yee Wan

City University of Hong Kong (CityUHK) - Centre for Chinese & Comparative Law; Singapore Management University - School of Law

Date Written: 2013

Abstract

This two-part article considers the extent to which UK company law and takeover regulation may have contributed to the supposed short-termism exercised by target directors in takeovers, that is, target directors focusing only on short-term financial gain to the current shareholders, rather than the target’s long-term wealth creation. This article argues that general company law and takeover regulation do not mandate target directors to strictly prioritise the short-term financial interests of the company when determining whether to recommend a particular takeover bid. While company law and takeover regulation require the target board to consider stakeholders’ interests, neither shareholders nor stakeholders have an enforceable right of action against the directors in connection with their failure to do so.

Keywords: Takeover, Directors’ powers and duties, Corporate Governance, Enforcement, Hong Kong, Schemes of Arrangement

Suggested Citation

Wan, Wai Yee, Takeovers and Countering Short-Termism in Target Boardrooms (2013). 34 Company Lawyer 43 and 68 (in 2 parts) pp 1-30, (2013), Singapore Management University School of Law Research Paper No. 42/2013, Available at SSRN: https://ssrn.com/abstract=2319272 or http://dx.doi.org/10.2139/ssrn.2319272

Wai Yee Wan (Contact Author)

City University of Hong Kong (CityUHK) - Centre for Chinese & Comparative Law ( email )

83 Tat Chee Avenue
Room P5300, 5th Floor, Academic 1
Kowloon Tong
Hong Kong

Singapore Management University - School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

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