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33 Nw. J. Int'l L. & Bus. 619 (2012-2013)
Transplanting a Poison Pill to Controlling Shareholder Regimes - Why It Is So Difficult

handle is hein.journals/nwjilb33 and id is 637 raw text is: Transplanting a Poison Pill to Controlling Shareholder Regimes- Why It Is So Difficult By Sang Yop Kang* Abstract: Recently, the great tide of globalization has caused M&A activities to spill over into controlling shareholder regimes (economies dominated by controlling shareholders). Due to a seismic change arising from an unprecedented takeover wave, transplanting the Delaware pill has been heavily discussed in controlling shareholder regimes. This Article explores how legal and socio-economic conditions of the United States (State of Delaware) and controlling shareholder regimes are different and why transplanting the Delaware pill could create unintended results in controlling shareholder regimes. First, the legitimacy of the Delaware pill is supported by corporate governance institutions, such as a relatively functional board, a ballot box safety valve, and an efficient judiciary. Many controlling shareholder jurisdictions, however, do not have these lynchpins. As a result, the transplanted pill in controlling shareholder regimes could be absolute and M&A activities would be stifled Second, the Delaware pill has invited a large number offriendly deals in the United States since the market has adjusted to the pill by developing a generous severance pay system. However, such a system is not legally or politically permissible in many controlling shareholder regimes. As a result, the transplanted pill would not encourage friendly M&A, but simply entrench target * Assistant Professor, Peking University School of Transnational Law; J.S.D. (Doctor of Science of Law), Columbia University School of Law; Attorney at Law; CFA (Chartered Financial Analyst). This Article is based on a chapter of J.S.D. dissertation submitted to Columbia University School of Law. It would not have been possible to complete this Article without the input, guidance, and support of many individuals. Most of all, I thank my parents and brother for their endless support, trust, and sacrifice. I also thank my mentors at Columbia University School of Law-Professors Merritt Fox, Jeffrey Gordon, Curtis Milhaupt, and Katharina Pistor-for their invaluable advice and insightful comments. It was truly my privilege and honor to have an opportunity to conduct research with these distinguished professors whom I respect and admire. I thank my colleague, Professor Douglas Levene for his great comments and advice as well. In addition, I thank Chancellor Wen Hai at Peking University in Shenzhen, Dean Stephen Yandle and other faculty members at Peking University School of Transnational Law, Chancellor Jeffrey Lehman at New York University Shanghai, Professor Jesse Fried at Harvard University School of Law, Professors Bok Ki Hong, Sung Tae Kim, Hyun Yoon Shin, and Doctor Nansulhun Choi at Yonsei University School of Law, and Judge Sang-Koo Park for their advice and moral support. In addition, my thanks go to Danlin Chang, Xiangmei Han, Yiseul Kim. Jie Lin, Jie Yin, and Zhaoke Zhu for their excellent assistance. I appreciate the efforts and comments of editors from the Northwestern Journal of International Law and Business as well. 619

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