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The Fiduciary Duties of Directors of a Target Company
Facing a Hostile Takeover
Mergers and Acquisitions,Fiduciary Duty,Judicial Review,Business Judgment Rule,Enhanced Judicial Scrutiny,Proper Purpose Doctrine,Administration Control,
|Publication Year :||2019|
In 2018, the rise of deal value and volume of mergers and acquisitions (M&A) in Taiwan was mostly attributable to the soaring international capital level and robust transformations among enterprises. In addition to several large-scale international M&A deals, the increase of M&A between Taiwanese small and medium sized enterprises (SMEs) have contributed to the thriving M&A market. Investment consulting firms report that in current trends, more SMEs are expected to face M&A challenges within 2 years due to global competitions; consequently, more M&A disputes are likely to arise in the near future. Take hostile takeovers as an example, though this kind of M&A activity can be viewed as an approach to business supervision, most people still hold a negative attitude towards it. From the perspective of previous hostile takeover cases, such as the takeover of Taiwan International Securities by China Development Financial Holdings, that of TA-I Technology by Yageo Corporation, and the recent takeover of Siliconware Precision Industries launched by Advanced Semiconductor Engineering, have also been highly controversial. In recent years, the commercial laws in Taiwan has undergone several amendments, and the government has gradually turned to a more positive attitude toward hostile takeovers. However, because such takeovers are relatively rare in Taiwan compared with the United States and United Kingdom, legislators have not directly responded to essential issues of hostile takeovers; relevant systems are thus imcomplete. Under such circumstances, this study explored the M&A laws and regulations in the United States and United Kingdom to establish legal standards for determining the liabilities of directors in a target company facing a hostile takeover. The findings are expected to provide a sound environment for developing a M&A market and mitigate negative views on hostile takeovers among businesses.
By focusing on takeover bids, a type of hostile takeover that is mainly adopted by companies at home and abroad, this study explored whether the actions taken by directors of a target company under the threat of a hostile takeover, fulfill their fiduciary duties. Therefore, this study would start with the distribution of ownership between directors and shareholders and determined the party entitled with the right to make the final decision in a hostile takeover. Subsequently, through a comparison of M&A law in several countries: the Delaware Courts of the United States, United Kingdom and Canada, this study would identify the liabilities of directors. Moreover, the opinions of various scholars on aforesaid legal standards were reviewed to provide a reference for establishing a full-fledged regulatory framework in Taiwan. Finally, the study would turn to Taiwan legal system, in addition to reviewing relevant regulations and cases related to hostile takeover, it would also analyze cases including the takeover deal between Taiwan Navigation and Chinese Maritime Transport, and the takeover of Siliconware Precision launched by Advanced Semiconductor Engineering. It is expected that the results of this study can be served as a reference for legislative and judicial practices in the future.
|Appears in Collections:||法律學系|
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