Comparative Corporate Governance Coursework Example | Topics and Well Written Essays - 3750 words

Comparative Corporate Governance - Coursework Example deal with mergers and acquisitions and will further strengthen the differences that exist between US and UK takeover activities. The directors of target corporations in U.S. can make use of the available takeover defences to shift the hostile offers within the procedures of a conciliated acquisition that creates greater power for negotiation allowing the board to optimize the value of shareholders within M&A transactions. While the process of conciliation is on, the directors have the power to consolidate provisions within the M&A agreement under the deal protection measure, that goes on to elevate the prices and premium rates for the shareholders. Therefore, we find that in case of US target corporation as per the extensive rules established under the Delaware General Corporation Law and the Delaware common law the ultimate authority and power is wielded by the board of directors in case of selling the company. However, the board of directors in U.K. target corporations do not have similar powers to transfer the offers into the process of conciliation. Instead, in this case the takeover defences are face strict prohibition order in UK and the recent amendments made to the takeover code by the Panel impedes the use of any kind of deal protection measures. Therefore, by removing the deal protection measures and the takeover defences, the takeover code largely curbs the board’s power of negotiation. This article will examine the various differences that exist in the regulation of takeover defences in the UK and the US and how they reflect the different approaches taken in the UK and the US to the balance of  power between the board of directors and the shareholder body. Discussion Antitakeover disposition... From the research it can be comprehended that antitakeover disposition used by target firms are defence measures adopted to avoid unwarranted hostile tenders presented by any future bidders. Some of the defence measures are used as pre-emptive strategies (in anticipation of future negotiation), while there are also a wide spectrum of complaisant defences available to organisations that find themselves as potential targets after the negotiations. Besides these, the defence strategies and the manner by which they can be employed differ widely between US (especially under Delaware law), and UK. As per the Delaware law while defending against a hostile takeover the directors of the target company may apply their ‘business judgment rule’ where they are allowed to show that after showing â€Å"good faith and reasonable investigation,† they felt a threat to the present policies of the corporation. Furthermore as per the awarded sentence in the case Unocal Corp v Mesa Pet roleum Co, a judiciary review of any defensive takeover strategies looks towards whether the threat mentioned by the directors were viewed reasonably, and if the defensive strategies applied were feasible to the posed threat. In UK however, in direct contrast, the use of takeover defences to ward off hostile takeovers is restricted largely by the City Code on Takeovers and Mergers and make sit necessary that there is shareholder approval before the defensive strategies are exercised.