Required reading

1. EU: Cross Border Merger Directive; SE Regulation, arts. 2(1), 17–29

2. D: AktG, § 179a; UmwG, §§ 2, 16, 20, 22, 29; HGB, § 25; BGB, § 613a

3. UK: CA 2006, secs. 904–918

4. US: DGCL, §§ 251–253, 259–262(a) and (d), 271

Governance of mergers and acquisitions

Three governance techniques

In the last chapter, we looked at the types of structures used in acquisitions and the legal tools that can be used to protect a deal. Here, we will examine the manner in which UK, German and US law govern merger and acquisitions transactions. Many mergers and major sales of assets significantly change the company's economic makeup and the degree of control current shareholders exercise. For this reason, early corporate statutes either prohibited such transactions altogether or required unanimous shareholder approval before allowing management radically to change the nature of the investment into which shareholders entered when purchasing their shares. As economic development demanded increased scale and scope of industries, mergers and acquisitions became more common and the law became more flexible, and lawmakers have developed three types of interrelated governance techniques to protect the interests of shareholders. Shareholders have been given a right to know and decide, a right not to be unfairly oppressed by those in power, and a right to fair compensation for their investment.