A Proposal For Remedial Arrangement

A proposal for Remedial Arrangement

Introduction qAn arrangement proposed by Bebchuk (1988) would “enable shareholders to express their preference concerning the bid’s success separately from their decision to have their shares acquired in the event of a takeover.”

q To ensure that shareholders express their true preferences, the bidder should be prohibited from penalizing disapproving tenders if the bid is approved 

Advantages qProvisions by law enable the design of a uniform qefficient mechanism qsave transaction and information costs 

Drawback of the arrangement qit would increase takeover premiums and thus would not leave any incentive for prospective bidders to search for potential targets 

qFurther, the current 5 percent statutory limit on the amount of shares that an acquirer can purchase without a 13D filling could be raised to increase the rewards for search

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