Hostile takeover regimes in Asia: A comparative approach

• Main Authors: VAROTTIL, Umakanth, WAN, Wai Yee
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Hostile takeovers; legal transplantation; Asia; Singapore; Hong Kong; Japan; Korea; India; China; Asian Studies; Commercial Law; Comparative and Foreign Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/2896; https://ink.library.smu.edu.sg/context/sol_research/article/4854/viewcontent/Hostile_Takeovers_Final_Draft_submission__1_.pdf
• Institution: Singapore Management University

The market for corporate control is animportant corporate governance mechanism for the discipline of corporatemanagers. However, the process and substance of the regulation of hostiletakeovers differs remarkably among various jurisdictions. Existing andinfluential scholarship has focused on the differences in regulation between UnitedStates (US) and the United Kingdom (UK), with the explanations being founded ininterest group politics. Influential as it is, the question is whether thetheory can be extended outside of the US and the UK, particularly to theirlegal transplants in Asia? In the last few decades, many of the Asianjurisdictions have drawn heavily from the US and the UK when framing their owntakeover regulation. Yet, Asia differs significantly from the US and the UK,particularly in respect of the much higher concentration of shareholdings amongtheir publicly listed companies, and their institutions supporting takeoverregulation, such as the securities regulator, the stock exchange and thejudiciary, are very different. Thus, it is not surprising that the outcome ofthe substantive regulation also differs despite the legal transplantation,though there may be superficial formal convergence. The differences in takeoverregulation and the reasons for such differences are under-studied in theexisting scholarship. Our study fills the gap by focusing on theregulation of hostile takeovers. In this article, drawing from an earlier workwhich studies, among others, takeover regulation in six significant economiesin Asia (China, Hong Kong, Japan, India, Korea and Singapore), we examine thedifferences in the takeover law and regulation of the exporting countries (USand the UK) and recipient countries (the six Asian economies), and we explainthe reasons for the differences. In particular, we focus on three questions:first, what are the interest groups that are relevant to the choice of initialtakeover regulation in Asian economies? Second, after the selection hasoccurred, what are the reasons for the continued lack of functionalconvergence? Third, are there any unintended consequences of legaltransplantation of the US or UK model of takeover regulation in the Asianeconomies? We argue that takeover regulation in Asia must be viewed through alens that is different from the Anglo-American approach in view of the factthat the institutional factors that are at play when choices were (and arecontinuing to be) made. Our study has important implications on the academicdebates on the efficacy of legal transplantations, comparative studies ofhostile takeover regimes and the comparative study of interest groups inshaping takeover regulation to a wider set of Asian countries than examined bycurrent scholarship. Our study is relevant to emerging countries consideringtheir reforms of takeover regulation.