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6 Bus. Law. Update 1 (1985-1986)

handle is hein.journals/buslwme6 and id is 1 raw text is: THE BSNS LAWER BRDA Congress Responds to Hostile Tender Offers The increased pace of hostile tender of- fers against even the largest publicly- held corporations has generated intense national publicity and increasing criti- cism of the participants in these contests for corporate control. During the last session of Congress this public criticism led to a plethora of legislative proposals designed to substantially expand federal regulatory control over participants in tender offers. Tender offers for securities of publicly-held companies are presently regulated by the Securities and Ex- change Commission under the 1968 Williams Act amendments to the Secur- ities Exchange Act of 1934. The regula- tion imposes disclosure requirements and antifraud prohibitions on partici- pants in tender offers and gives the SEC rulemaking power over certain aspects of the tender offer process. The Williams Act, however, purports to be neutral on the desirability of hostile tender offers. Its avowed purpose is to protect public shareholders without interfering either with the activities of tender offerors or the ability of target companies to defend themselves against hostile tender offers. The renewed congessional focus Congress renewed its interest in tender offers in 1984 in response to the highly publicized tactics of target company managements in defending against hos- tile tender offers - tactics with such colorful labels as greenmail, .... golden parachutes, poison pills, and the Pac Man defense. These tactics created concern that managements of target companies were seeking to per- petuate corporate control by adopting defensive tactics that injured their com- panies and unjustly enriched corporate raiders and professional arbitrageurs to the detriment of public investors. Initial 1984 legislative proposals sought to im- pose federal controls over target com- pany responses to hostile tender offers by: Prohibiting greenmail transactions (in which target companies buy out hostile tender offerors at a pre- mium above market price) except with shareholder approval or where accompanied by equivalent offers to all shareholders. * Prohibiting golden parachute em- ployment arrangements which provide officers and directors of target companies with substan- tially increased severance pay- ments in the event of employment termination as a result of a suc- cessful hostile tender offer. * Prohibiting poison pill tactics whereby target companies defend against hostile tender offers by is- suing large amounts of new securi- ties or options to friendly third parties or existing shareholders. Continued on page 2 Septermibr/October 1985 Volume 6 Number 1 Secion of Corporaton, Banking and Business Law /A From the Section Chairman... Section publications and programs have been quite effective in informing our Section members about the activities of the Section and its committees in areas of substantive law. Little has been pub- lished, however, about the workings of the Section itself. This article will sum- marize some current Section policies and procedures that may interest Section members, particularly active committee members. Finances Publication costs of The Business Lawyer comprise approximately 50 percent of our Section budget thus our dues are tied closely to the costs of this publica- tion. Although Section dues have in- creased in recent years, they remain at the relatively low level of $20. This low dues structure clearly results from the Section's unique and long standing pol- icy that, with limited exceptions, Continued on page 3 INSIDE The Section's Ad Hoc Working Group takes the lead on tax reform. 4 U.S. payment systems law moves in new directions. 5 Proposals for South African sanctions proliferate. 6 This month we spotlight the Committee on Savings Institutions. Drug and chemical exports to the EEC face new import requirements and multinational controls. - 7 %r

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