Do the states play a role in merger regulation, or is it all done at the national level? Explain.

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Do the states play a role in merger regulation, or is it all done at the national level? Explain.

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Do the states play a role in merger regulation, or is it all done at the national level? Explain.

Explanation & AnswerSolution by a verified expert

Explanation

States also play a role in merger regulation along with the center. States have passed several laws to discourage hostile takeovers. For example,  27 states have passed Control Shares Acquisition to limit shareholder votes' voting power. This happens when the acquiring company purchases stock with a big impact on shareholder's voting power. If the acquiring company exceeds the limit, it cannot vote without majority shareholders' consent. Also, over 30 states of Country U have Expanded Constituency statutes that protect stakeholders' interests other than the shareholders, such as employees. Some states also protect their shareholders from their managers by putting a limit on golden parachutes, poison pills. These provisions benefit the managers at the expense of the shareholders.

Verified Answer

States also play a role in merger regulation along with the center. States have also passed several laws to discourage hostile takeovers. For example, 27 states of Country U have passed Control Shares Acquisition to limit the voting power of shareholder's votes. This happens when the acquiring company purchases stock with a big impact on shareholder's voting power. Also over 30 states have Expanded Constituency statutes that protect the interests of stakeholders other than the shareholders such as employees. Some states have Fair Price Provision requiring the acquiring company to pay a price equal to or greater than the price determined by the market conditions.

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