DIRECTORS’ DISCRETION AGAINST HOSTILE TAKEOVER BIDS: SUGGESTIONS FOR TURKISH LAW

The discussion of directors’ roleagainst hostile takeover bids has alwaysbeen an important topic in the companylaw. Especially in common law countries,there is a remarkable divergence in thisissue. The United States and the UnitedKingdom have been the pioneers of twosubstantially different approaches whichderived from their different backgroundin this particular topic. Apart fromthem, the European Union is anotheressential legislative actor, especially forTurkey as a candidate country. However,there is a legal gap in Turkey as thereis not any explicit policy in Turkish lawregarding directors’ role against hostiletakeover bids. This article scrutinisesthe fundamental approaches aboutdirectors’ discretion against hostiletakeover bids, and in light of this, itsuggests a proposal for the Turkish law.

Saldırgan Devralma Tekliflerine Karşı Yönetim Kurulunun Takdir Yetkisi: Türk Hukuku İçin Öneriler

Saldırgan devralma girişimlerine karşı yönetim kurulu üyelerinin takdir yetkisi geçmişten bugüne tartışmalı bir konu olagelmiştir. Özellikle anglo-sakson hukuk sistemini (common law) benimseyen ülkelerde dikkat çekici bir ayrışma söz konusudur. Birleşik Devletler ve Birleşik Krallık, bu konuda farklı tarihsel arka planlarından kaynaklanan, temelden farklı iki yaklaşımın öncülerindendir. Bunların yanı sıra Avrupa Birliği de, özellikle aday ülke olan Türkiye için önemli bir yasa koyucu aktördür. Ancak Türkiye’de, saldırgan devralma girişimlerine karşı yönetim kurulu üyelerinin takdir yetkisine ilişkin açıkça düzenlenmiş bir kural yer almamaktadır. Bu nedenle, bahsedilen konuda Türkiye’de bir yasal boşluk olduğu görülmektedir. Bu makale ilgili konudaki temel yaklaşımları incelemekte ve bu inceleme ışığında Türk hukuku için önerilerde bulunmaktadır.

PDF

___

Unitrin Inc v American Gen. Corp 651 A.2d 1361 (Del., 1995).

Unocal Corp v Mesa Petroleum Corp 493 A2d 946, 9554 (Del, 1995)

Revlon v McAndrews & Forbes Holdings Inc 506 A.2d 173 (Del., 1986)

Re a Company (1986) B.C.L.C. 382 (UK)

Howard Smith Ltd v Ampol Petroleum Ltd (1974) A.C. 821 (UK)

Hogg v Cramphorn Ltd (1967) Ch. 254 (UK)

Heron International v Lord Grade (1983) BCLC 244, (1982) Com LR 108 (UK Court of Appeal)

Cases: Dawson International Plc v Coats Paton Plc (1988) 4 BCC 305 (UK)

State Of Delaware - Division Of Corporations - List Of Authorized Vendors With Direct Web Access’ accessed 18 March 2017

Ownership Structure | Türkiye İş Bankası A.Ş.’ accessed 1 April 2017.

Governance Structure - OYAK’ < http://www.oyak.com.tr/EN/corporate/ what-oyak-is/managing-bodies.html > accessed 2 April 2017.

European Commission - Enlargement - Turkey - Relations’ (23 November 2006) accessed 18 March 2017.

Corporate History - 2011-2015’ Accessed 2 April 2017

Consolidated Data’ (Borsaistanbul.com, 2017) accessed 21 April 2017

Business Judgment Rule’ accessed 18 March 2017

Websites: ‘Board of Directors | Türkiye İş Bankası A.Ş.’ accessed 2 April 2017

Yurtoğlu B, ‘Ownership, Control and Performance of Turkish Listed Firms’ (2000) 27 Empirica accessed 29 March 2017

You C, ‘The Proper Purpose Rule and the Exercise of Directors’ Power in the Context of a Takeover Battle’ (2017) 38 Business Law Review, Issue 1.

Yeung H, ‘Managing Corporate Risks by Regulating Executive Pay: A Legal And Economic Analysis’ (2012) 2 Durham Law Review

Yamak S and Ertuna B, ‘Corporate Governance and Initial Public Offerings in Turkey’ in Alessandro Zattoni and William Judge (eds), Corporate Governance and Initial Public Offerings: An International Perspective (Cambridge University Press (Virtual Publishing) 2012)

Winter J, Schans Christensen J, Garrido Garcia J M, Hopt K J, Rickford J, Rossi G, Simon J, ‘Final Report of the High Level Group of Company Law Experts on issues related to takeover bids’ (2002) accessed 23 March 2017

Wearing R T, Cases in Corporate Governance (1st edn, SAGE Publications 2005)

Van Gerven D, Common Legal Framework For Takeover Bids In Europe (Cambridge University Press 2008)

Turan M T and Çollak Ö, ‘Mergers and Acquisitions on the Rise, Co-Published Section: Turkey’ (2006) International Financial Law Review

Tekinalp Ü and Başaran-Symes C, ‘New Turkish Commercial Code A blueprint for the future’ (pwc Turkey) accessed June 16, 2017

Taylor C R, ‘The European Takeover Directive: A US Comparison’ (August 30, 2016) University of Oslo Faculty of Law Research Paper No. 2016-14

Stout L A and others, ‘The Modern Corporation Statement on Company Law’ (October 6, 2016). Available at SSRN: https://ssrn.com/abstract=2848833 Accessed on 23.03.2017.

Smith A, An Inquiry Into The Nature And Causes Of The Wealth Of Nations (1776) accessed 17 March 2017.

Slaughter C M, ‘Rights Offerings, Takeovers and US Shareholders: Part 2’ (2000) 23(3) Company Lawyer

Sjåfjell B, Towards a Sustainable European Company Law: A Normative Analysis of the Objectives of EU Law, with the Takeover Directive as a Test Case (Aspen Publishers 2009)

Schillig M, ‘Corporate Law after Brexit’ (2016) 27(3) King’s Law Journal DOI:10 .1080/09615768.2016.1250481

Schaafsma J R, ‘Hostile Takeover Bids and Defances: The Netherlands’ in Klaus J Hopt and Eddy Wymeersch (eds), European takeovers: law and practice (Butterworths Law 1992)

Romano R, ‘The Future Of Hostile Takeovers: Legislation And Public Opinion’ (1988) 57 Cincinnati Law Review

Rodriguez P I, ‘Obligations of Directors in Takeovers’ in David Cabrelli and Mathias M Siems (eds), Comparative Company Law: A Case-Based Approach (Intl Specialized Book Service 2013)

Ribstein L, ‘Why Corporations?’ (2004) 1 Berkeley Business Law Journal

Anonim Ortaklık Kurumsal Yönetimi (Corporate Governance) (Çağa Hukuk Vakfı Yayınları 2005)

Paslı A, Anonim Ortaklığın Devralınması (Takeover of Corporation) (Vedat Kitapçılık 2009)

Oba B, Tigrel B and Sener P, ‘Board Structure in Listed Firms: Evidence from an Emerging Economy’ (2014) 14 Corporate Governance 382, 384-385 accessed 29 March 2017.

Du Plessis J J, Hargovan A, Bagaric M and Harris J, Principles of Contemporary Corporate Governance (2nd edn, Cambridge University Press 2011)

Mukwiri J, ‘Myth Of Shareholder Primacy In English Law’ (2013) 24 European Business Law Review

Moroğlu Arseven ‘M&A In Turkey: Lexology Navigator Q&A | Lexology’ (Lexology. com, 2017) accessed 19 April 2017.

Morris J, ‘The Glazer Bid: In Whose Interests?’ (Practical Law) accessed 18 March 2017.

Shareholder Primacy, Labour and the Historic Ambivalence of UK Company Law’ (September 7, 2016). University of Cambridge Faculty of Law Research Paper No. 40/2016. Available at SSRN: https://ssrn.com/ abstract=2835990 or http://dx.doi.org/10.2139/ssrn.2835990 accessed 18 March 2017

Moore M, ‘A Temple Built on Faulty Foundations: Piercing The Corporate Veil and the Legacy of Salomon V Salomon’ (2006) Journal of Business Law

Monsen-Jr., R J and Downs A, ‘A Theory of Large Managerial Firms’ (1965) 73 Journal of Political Economy 221.

McConvill J and Bagaric M, ‘Towards Mandatory Shareholder Committees in Australian Companies’ (2004) 28 Melbourne University Law Review

Mason E S, ‘The Apologetics Of “Managerialism”’ (1958) 31 The Journal of Business

Mäntysaari P, Comparative Corporate Governance: Shareholders As A Rule- Maker (1st edn, Springer-Verlag Berlin and Heidelberg GmbH & Co K 2005)

Magnuson W, ‘Takeover Regulation In The United States And Europe: An Institutional Approach’ (2009) 21 Pace International Law Review

Marks S G, ‘The Separation of Ownership and Control’ (2000) 3 Encyclopedia of Law and Economics accessed 18 March 2017.

Lokmanhekim T and Yukaruç N N, ‘Turkey’ in Mark Zerdin (ed), The Mergers & Acquisitions Review (Law Business Research Ltd 2014)

Loewenstein M, ‘Unocal Revisited: No Tiger In The Tank’ (2001) The Journal of Corporation Law

Kräkel M, ‘Managerial Versus Entrepreneurial Firms: The Benefits of Separating Ownership and Control’ (2004) 56 Schmalenbach Business Review

Kraakman R, Davies P, Hansmann H, Hertig G, Hopt K J, Kanda H and Rock E B, The Anatomy of Corporate Law: A Comparative and Functional Approach (Oxford University Press 2004)

İpekel-Kayalı F, Türk Ticaret Kanunu’na Göre Birleşmeler (Mergers According to the Turkish Commercial Code) (Vedat Kitapçılık 2014)

Hurt C, ‘The Hostile Poison Pill’ (2016) UC Davis Law Review, Vol. 50, No. 1, 2016; BYU Law Research Paper No. 16-04.

Hannigan B, Company Law, (4 th edn, Oxford: Oxford UP 2016)

Gurarda S, Ozsoz E and Ates A, ‘Corporate Governance Rating and Ownership Structure in the Case of Turkey’ (2016) 4 International Journal of Financial Studies

Gordon R A, ‘Ownership and Compensation as Incentives to Corporation Executives’ (1940) 54 The Quarterly Journal of Economics

Gordon J N, ‘Governance Failures Of The Enron Board And The New Information Order Of Sarbanes-Oxley’ Columbia Law School Working Paper No.216 - Harvard Law and Economics Discussion Paper No. 416.

Gaughan P, Mergers, Acquisitions, And Corporate Restructurings (Wiley 2015)

Gatti, M, ‘It’s My Stock and I’ll Vote If I Want To: Conflicted Voting by Shareholders in (Hostile) M&A Deals’ (February 27, 2016) 47(1) University of Memphis Law Review

Franks J and Mayer C, ‘Hostile Takeovers and the Correction of Managerial Failure’ (1996) 40 Journal of Financial Economics

Ferrarini G and Miller G P, ‘A Simple Theory of Takeover Regulation in the United States and Europe’ (2009) 42 Cornell International Law Journal

Dinç İ, ‘Mandatory Takeover Bids In Turkey: An Overview Of The New Legal Regime’ (2013) IV Law & Justice Review

Dignam A, Hicks & Goo’s Cases And Materials On Company Law (7th edn, Oxford University Press 2011)

Davies P L, Gower’s Principles of Modern Company Law (6th ed., Sweet & Maxwell, 1997)

Dean J, ‘Directors’ Duties In Response To Hostile Takeover Bids’ (2003) International Company and Commercial Law Review

Çoştan H, Yeni Türk Ticaret Kanunu’na Göre Birleşme, Bölünme Ve Tür Değiştirme Kararları (According To The New Commercial Code Decisions Of Mergers, Divisions (Spin-Off/Split-Up) And Restructuring Activities) (3rd edn, Seçkin 2013)

Çakırca T and Çiğdemtekin G, ‘Public Mergers and Acquisitions in Turkey: Overview’ (2016, Practical Law) accessed 29 March 2017.

Cox J D and Hazen T L, Corporations: Including Unincorporated Forms Of Doing Business (2nd edn, Aspen, Wolters Kluwer 2003)

Coffee J C, ‘The Rise of Dispersed Ownership: The Roles of Law and the State in the Separation of Ownership and Control’ (2001) 111 The Yale Law Journal

Cranston R, ‘The Rise and Rise of the Hostile Takeover’ in Klaus J Hopt and Eddy Wymeersch (eds), European Takeovers: Law and Practice (Butterworths Law 1992)

Clarke B, ‘Directors’ Duties During An Offer Period – Lessons From The Cadbury PLC Takeover’ (2011) UCD Working Papers in Law, Criminology & Socio-Legal Studies Available at SSRN: https://ssrn.com/abstract=1759953 or http:// dx.doi.org/10.2139/ssrn.1759953 accessed 17 March 2017.

Cassidy J, Concise Corporations Law (Concise) (5th edn, Federation Press 2006)

Cara F and Lane P F, ‘The Business Judgment Rule and Unocal: Twin Barriers to Shareholder Welfare’ (1989) 5 Journal of Civil Rights and Economic Development

Câmara P, ‘Defensive Measures Adopted by the Board: Current European Trends’ (2000) Company Law Reform in OECD Countries accessed 18 March 2017

Cahn A and Donald D C, Comparative Company Law: Text And Cases On The Laws Governing Corporations In Germany, The UK And The USA (1st edn, Cambridge University Press 2010)

Brudney V, ‘Corporate Governance, Agency Costs, And The Rhetoric Of Contract’ (1985) 85 Columbia Law Review

Bilgili F and Demirkapı E, Şirketler Hukuku Dersleri ( Commercial Law Lessons) (3rd edn, Dora 2014)

Bhagat S and Romano R, ‘Emprical Study of Corporate Law’ in Mitchell A Polinsky and Steven Shavell (eds), Handbook of Law and Economics (Amsterdam Elsevier 2007)

Berle A A and Means G C, The Modern Corporation and Private Property (Transaction Publishers 1932)

Berger D J, ‘A Comparative Analysis of Takeover Regulation in the European Community’ (1992) 55 Law and Contemporary Problems

The Case Against Board Veto in Corporate Takeovers’ (2002) 69 The University of Chicago Law Review

Bebchuk L A, ‘The Case For Increasing Shareholder Power’ (2005) 118 Harvard Law Review

Barboutis G O, ‘Takeover Defence Tactics: Part I: The General Legal Framework On Takeovers’ (1999) 20 Company Lawyer

Director Versus Shareholder Primacy In New Zealand Company Law As Compared To U.S.A. Corporate Law’ (2014) Law-Econ Research Paper No. 14-05

Director Primacy In Corporate Takeovers: Preliminary Reflections’ 55 Stanford Law Review

Bainbridge S, Bainbridge’s Mergers And Acquisitions, 3D (Concepts And Insights Series) (3rd edn, Foundation Press Thomson/West 2012)

Ashby S, ‘Strengthening The Public Company Board Of Directors: Limited Shareholder Access To The Corporate Ballot Vs. Required Majority Board Independence’ (2005) University of Illinois Law Review

and Skeel D A, ‘Who Writes the Rules for Hostile Takeovers, and Why?— The Peculiar Divergence of U.S. and U.K. Takeover Regulation’ (2007) 95 The Georgetown Law Journal

Armour J, Jacobs J B and Milhaupt C J, ‘The Evolution of Hostile Takeover Regimes in Developed and Emerging Markets: An Analytical Framework’ (2011) 52 Harvard International Law Journal

Alchian A A and Williamson O E, ‘The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm’ (1965) 33 Econometrica