Abstract

This two-part article considers the extent to which UK company law and takeover regulation may have contributed to the supposed short-termism exercised by target directors in takeovers, that is, target directors focusing only on short-term financial gain to the current shareholders, rather than the target’s long-term wealth creation. This article argues that general company law and takeover regulation do not mandate target directors to strictly prioritise the short-term financial interests of the company when determining whether to recommend a particular takeover bid. While company law and takeover regulation require the target board to consider stakeholders’ interests, neither shareholders nor stakeholders have an enforceable right of action against the directors in connection with their failure to do so.

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