chapt 3: us legal & regulatory framework

Question 1

3 types of merger laws in the US

Answer 1

1. Federal security laws
2. State corporation laws
3. Federal antitrust laws

Question 2

2 main US securities laws

Answer 2

1. Securities Act 1933
   * required providing a prospectus
2. Securities Act 1934
   * made certain activity illegal
   * the william act 1968

Question 3

explain what’s the William act 1968

Answer 3

purpose:
- regulate tender offer (20 days b4 an answer, no more friday night special) + (same price for all SE)
- provide info about acquisition and shareholder no more ignorant
- increase confidence by enhancing market reputation for fairness and honesty.

Question 4

Explain the 2/5 subsection of of William act

Answer 4

• section 13 d) Regulate substantial share acquisitions
  5% of a cie = toe hold, you can elect members of the board
• section 14 d) regulate tender offer (20 days rule)

**10 days to fill 13 d) when you buy 5% or more

Question 5

explain how elon musk bought twitter and why they didn’t punish him

Answer 5

d.5

Question 6

explain the filing of an 8k

Answer 6

• 15 days of the occurence of a significant event
• consider significant is it exceed 10% of book value of registrants’ assets
  ** tyco did many deal with filing it (too much info to give, la flemme)

Question 7

explain the filing of a S-4

Answer 7

• when bidder use stock to finance an acquisition
• require SE when issue more than 20% of outstanding shares to acquire target

Question 8

is it a bad thing the dilution of share when you’re acquiring ?

Answer 8

not if it compensate with the earning per share

Question 9

when do you fill a 13 d or a schedule TO

Answer 9

13 d) you got 20 days
schedule to (regulate disclose info) at the time you declare tender offer

Question 10

why the sun oil vs becton dickinson deal was illegal

Answer 10

they filed the 13D after buying 20% but its after 5%

Question 11

what’s stock parking ?

Answer 11

illegal way of avoding the law, putting shares in someone’ else name

Question 12

list the 8 factors test for a tender offer

Answer 12

1. active & widespread
2. substantial percentage
3. premium
4. terms are firm
5. offer contingent
6. offer open limited time period
7. offeree subject to pressure to sell
8. public aanouncement

Question 13

how many days you have to evaluate a competing tender offer?

Answer 13

MINIMUM of 10 days

Question 14

if you are 17 days into the offer period and you get a competing one, what’s the impact ?

Answer 14

you add 7 days

Question 15

whats the business judgment rule ?

Answer 15

managers & directors must show loyalty and care towards SE

Question 16

what’s the H-H index? how do you calculate?

Answer 16

asses the degree of market concentration to help determine if a merger is permissible or not.
- higher than 2500 (highly concentrated)
- 1500-2500 moderately
- less 1500 is unconcentrated

• somme des market share au carrés of a firm in the industry