Study about the mechanisms of confrontation with hostile takeover in English Law and their Feasibility in Iranian Law

Abstract

“take over" of business companies as a legal entity independent of "merger", is the acquisition of management control of other companies (the target company) by an individual or organ (the offeror or the acquirer company) through the purchase of the main assets or acquisition of the majority of voting shares in the election of directors (controlling shares in public companies). This legal entity has been a strategy with motives such as creating a monopoly in the market, gaining superior power, synergy, etc., which, considering its nature, is mostly in the form of a hostile Takeover of a target company by the acquiring company without the consent of the board of directors of the target company. In the meantime, the board of directors of the target company usually resorts to a series of measures to prevent the takeover of its company, which are referred to as mechanisms or defenses against hostile takeover. In this article, it is tried to introduce the aforementioned defenses in English law and examine the position of the Iranian legislator with a descriptive-analytical method and with a comparative perspective. Therefore, according to the results and considering different laws, it is not necessarily possible to apply the defense provided in English law in Iranian law. In addition, due to the lack of explicit and extensive legislation in Iranian law regarding the takeover entity, first of all, the necessity and need to formulate rules and regulations specific to the Takeover entity is felt in the laws of our country. Secondly, during the process of hostile takeover and the use of defense mechanisms against it, the shareholders of Iranian companies need more explicit support from the legislator against the decisions of the board of directors rather than profit seeking or ambitions of company managers in the process. takeover should not cause a drop in the value of the shares or damage other rights of the shareholders of the acquiring company or the target company.

Keywords

• takeover
• merger
• hostile takeover
• pre-bid defenses
• post-bid defenses