IS THERE A NEED FOR MANDATORY OFFERS IN COMPANY TAKEOVER? A CRITICAL ANALYSIS

Abstract

The aim of mandatory offers law is to offer protection to minorities where the takeover of a regulated company is imminent. Correspondingly, the Companies Act has been enacted to promote economic activity by encouraging investments. Thus, all rules within the ambit of the Companies Act must conform with the purpose of this legislation. Although the rules of mandatory offers serve a noble purpose, they appear to contrast with the purpose of the Act. The main pitfall appears to be the rules that trigger mandatory offers. This arguably may be an impediment to investments. The triggering percentage is not necessarily the main pitfall, but lack of distinct leeway is. This article investigates the impact of mandatory offers in relation to commerce, in order to reach an informed opinion about whether there is a variety of ways to regulate takeovers. This investigation will then determine whether the legislator could adopt a different system or provide precise rules that would exempt those who have acquired securities in the range of prescribed percentage without posing a danger to minorities.