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The UK Non-Frustration Rule: Should it be Replaced with a US-inspired Approach?

Huanyang Ma(Durham University)

Abstract

Recently, Arm Holdings, the most successful semiconductor and software design company in the UK, has agreed to be sold to SoftBank, a Japanese company. This takeover case, along with the case that Cadbury was acquired by Kraft in 2010, has led to questions about the openness to foreign mergers and acquisitions.[1] The non-frustration rule plays an important role in the openness of the UK’s market for corporate control.[2] Therefore, it is time to rethink about the non-frustration rule. One of the most heated questions is whether the rule should be replaced with the US-inspired approach. This article argues that the US-inspired approach will not function as well in the UK as it does in the US. After all, the UK and the US differ a lot in corporate structures and company regulations which make the background of the non-frustration rule different in two countries.

 

Keywords

UK Takeover Code; Non-Frustration Rule; “Poison Pill”; Takeover Defense

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DOI: http://dx.doi.org/10.26549/jfr.v4i1.2922

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