Comment by Jean-Pierre R. Bourtin, Jr.
The world's securities markets are globalizing at record pace. Today's investor, riding the information superhighway, and armed with the latest advances in technological wizardry, can buy or sell foreign securities at a moment's notice. This newfound freedom, while beneficial for the individual investor, is exerting considerable pressure on governments and courts intent on preserving the potency of their securities laws. With shareholder bases of publicly traded companies becoming more international in composition, countries with comprehensive securities regulations are discovering that resident investors cannot be protected unless these laws are applied extraterritorially. However, balancing shareholder protection with international comity can be difficult when a transaction, already governed by another nation's laws, involves actors and events located wholly outside a country's borders. Foreign takeovers demand the finest balancing because these transactions often implicate interests that strike at the heart of national sovereignty, and the extraterritorial regulation of foreign takeovers by a “third-party nation” can smack of regulatory imperialism. This Comment explores how the United States regulates foreign takeovers and describes the unfortunate consequences that have resulted from the extraterritorial application of the Williams Act. After reviewing the recent measures taken by the Securities and Exchange Commission (SEC) to reduce regulatory conflict, the Comment concludes that the SEC's piecemeal approach to the harmonization of takeover laws is only a temporary fix. The ills associated with the multijurisdictional governance of tender offers will persist until takeover laws harmonize on an international scale. Because this level of harmonization is unlikely to occur in the near future, the Comment concludes that regulatory conflict, while unavoidable, can be minimized through an international accord on the regulation of foreign takeovers. These “Principles of International Takeovers” would guide governments and courts in determining whether to regulate foreign tender offers by articulating four fundamental principles: (1) a minimization-of-conflict principle; (2) a situs-of-incorporation principle; (3) a national-security-interest principle; and (4) a prevention-of-fraud principle.
About the Author
Jean-Pierre R. Bourtin, Jr. Law Clerk to the Honorable Alex T. Howard, Jr., United States District Court, Southern District of Alabama. B.A. 1990, Boston College; J.D. 1995, Tulane Law School.
Citation
70 Tul. L. Rev. 1609 (1996)