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Strategic aspects of acquisitions

The regulation of takeovers

6.1 Regulation of mergers and acquisitions

During a takeover, it is important that the companies comply with relevant legislation
and regulations.

The regulation of takeovers varies from country to country but
focuses primarily on controlling the directors' behaviour and
ensuring that the shareholders are treated fairly. General principles
include:

 The directors should act in the best interest of their shareholders, and
should disregard their personal interests.

 All shareholders must be treated equally.

 Shareholders must be given all the relevant information to make an
informed judgement.

 The directors must not take action without the approval of shareholders.

 All information supplied to shareholders must be prepared to the highest
standards of care and accuracy.

 The assumptions on which profit forecasts are based and the accounting
polices used should be examined and reported on by accountants.

 An independent valuer should support valuations of assets.

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