Current US Debate | Holger Spamann | October 16, 2013


Current US Debate

by Holger Spamann Show/Hide

So where are we now?

The Airgas excerpt below summarizes the state of Delaware law. A board can maintain a poison pill for the mere reason that it believes the offer price to be inadequate. If the board is staggered by the charter (as opposed to the bylaws), the board can thus resist a hostile bid for at least one full year. This makes a Delaware corporation effectively “takeover-proof.”

Many see this as an undesirable state of affairs. One of them is Harvard Law School professor Lucian Bebchuk. Through his Shareholder Rights Project (a law school clinic), he is pursuing a campaign to “de-stagger” the boards of US corporations. This campaign has been phenomenally successful, as Bebchuk describes in his two memos below. The remaining item is one of many critiques by Martin Lipton of Wachtell Lipton, perhaps Bebchuk’s most vocal opponent.

As you read these materials, you should ponder the following questions:

  1. What do you think – do you find the current state of Delaware takeover law desirable?
  2. How could a law school clinic have such an impact in an area where countless investors have trillions of dollars at stake?

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October 27, 2013

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