UT Soft Law Review

UT Soft Law Review No.2 2010(ii)(iii)In contrast, to the cases where takeover defense measures are implementedbased on the substantive judgment that the takeover proposals are detrimentalto the shareholder interests, after the acquirers observe reasonable proceduresand adequate time and information for shareholders to appropriately decide andopportunities for negotiation are ensured, the analysis in this section does notapply. For such cases, the more restrictive analysis of (4) below should bereferred to. 12On the granting of cash or other financial benefits to the acquirersThe decision whether to accept or reject a takeover should in the end be madeby shareholders. Therefore, in cases where the acquirers do not followreasonable procedures and do not allow shareholders adequate time andinformation to appropriately decide whether to support or oppose the takeoversor opportunities for negotiation, there is no need to grant cash or other financialbenefits in implementing takeover defense measures. In such cases, theacquirers have the opportunity of consummating the takeovers successfully, byensuring shareholders the opportunities to decide by giving them adequate time,information, and opportunities for negotiation and having shareholders expresstheir support for the takeovers. Thus, when the acquirers do not observe theprocedures, it would be within the scope of reasonableness to implementtakeover defense measures without granting cash or other financial benefits (seethe note on page 18).Level of information disclosure to shareholdersshareholders to appropriately decide thismatter, the board of directors is permitted to exercise its authorityto provide necessaryinformation and to ensure a suitable period for consideration. Therefore, it would notbeabuse of the authority of the board of directors if, when a hostile acquirer contestingcorporate controlappeared, the board of directors requests the hostile acquirer to present a business plan and establish aperiod for consideration, to discuss with theacquirer to consider the business plan, to express its views asthe board of directors, andto propose alternatives to shareholders, as long as the materials requested andtheperiod for consideration are reasonable.”“ … The board of directors can not only request at its discretion that a hostile acquirerpresent a businessplan and establish a suitable period for consideration for the purposeof providing appropriate informationto shareholders to make their appropriatedecisions possible, but, in some cases, it should also be allowedto take appropriatemeasures against an acquirer who does not respond to reasonable requests, …fromtheperspective of protecting the interests of shareholders as a whole by reason thatnecessary informationand appropriate period for consideration is not ensured.12 For example, such cases belong to the category of (3) rather than (4), where takeover defense measuresare used in the face of takeovers to temporarily halt them untilgeneral meetings of shareholders scheduledwithin a certain period, where shareholders’ will on whether to accept or reject the takeovers is to bequeried, so thatadequate time and information necessary for shareholders to decide and opportunitiesfornegotiation would be ensured. In such cases, verifying the shareholders’ will onwhether to accept or rejectthe takeovers by choosing at general meetings of shareholders between opposing resolutions on theelection of directors proposed by thecompany and directors proposed by shareholders is merely theoccurrence of what isscheduled under the category of (3), not belonging to the category of (4).98