Regulating the regulators: A comparative analysis of takeover law

Abstract

This dissertation examines takeover regulation in New Zealand, the United Kingdom and the United States of America. It outlines the three systems of regulation before seeking to explain why differences exist between jurisdictions. The paper focuses on the non-frustration rule and self-regulation as two differences which set the systems apart. It evaluates theoretical merits as potential reasons for the divergence in regulatory approaches. Three jurisdiction-specific factors are also cited as reasons for differences in regulation: the competition generated through federalism, the influence of institutional shareholders and political ideology. The paper uses this analysis of the systems and influences on these systems as a platform to suggest reform to the New Zealand regulatory model. The reforms are centered on two parts of takeover regulation: active institutional investment and panel-lead regulation. It advocates for institutional investors to take a more active role in monitoring directors through the creation of a “Stewardship Code”. Further, the paper suggests the judiciary should exercise more restraint in its review of the Takeover Panel’s decisions. This would help foster commercial certainty as well as the cooperative relationship between the regulator and industry. The purpose of these reforms are to proactively ensure takeover regulation in New Zealand is well-supported and efficient as it faces progressively more commercial activity.