As there isn't much of interest to report or analyze from the Dutch corporate law front these days, here are three links with material that caught my eye this week.
1. The number of bankruptcies of legal entities in the Netherlands is slowly decreasing. From 650 in September to 500 last month (which is still significantly higher compared to October 2008).
These numbers may be tricky, as the monthly number also depends on the number of days that the courts schedules to handle bankruptcy cases. On a three-month-average basis, the number in October is 550, while in the six preceding months the average number was 600. Here's a chart with some figures.
So all in all, a small decline. For more stats, go here.
2. The European watchdogs in the banking scene appear to be almost ready to issue new rules for banks, covering aspects like capitalization, equity quality and debt levels; all triggered by the credit crunch of course. According to Nout Wellink, the chairman of the Basel committee (as well as De Nederlandsche Bank), the rules should be finalized next month.
3. Then a view across the Atlantic, less related to the financial crisis.
Guhan Subramanian, Steven Herscovici and Brian Barbetta offer an in-depth analysis of Delaware's "antitakeover statute" in their working paper Is Delaware’s Antitakeover Statute Unconstitutional? Evidence from 1998-2008, backed up with empirical data. Section 203 of the Delaware corporate statute, that is the subject of discussion here, hasn't been a real hotly debated issue since the 1980s. Instead, the focus in case law has shifted to the use by target corporations of defensive mechanisms, especially the poison pill. The authors capture the gist of the paper as follows.
The article makes three simple points. First, three federal district courts held in 1988 that Delaware’s antitakeover statute must give bidders a “meaningful opportunity for success” in order to be valid under the Supremacy Clause of the U.S. Constitution. Second, these three courts upheld Section 203 because the empirical evidence available at the time showed that bidders were able to achieve an 85% tender in hostile offers reasonably often, but all three courts left open the possibility that future empirical evidence could change this constitutional conclusion. Third, no bidder in the past nineteen years has been able to achieve 85% in a hostile tender offer against a Delaware target. We conclude from these points that:
“[T]he empirical claim that the federal courts have relied upon to uphold Section 203’s constitutionality is no longer valid. It seems possible that the federal courts would uphold the constitutionality of Section 203 on different grounds. But at the very least the constitutionality of Section 203 would seem to be up for grabs.”
The Wall Street Journal and The Deal have written about our findings, and Wachtell, Lipton has issued a memorandum to clients criticizing our article. We respond to the Wachtell critique at pp. 47-48 and footnote 166 of the current draft, available above.
Larry Ribstein is "skeptical of the authors' unconstitutionality claim. Notably, Section 203 is part of the Delaware's corporate statute, and therefore an integral part of its regulation of internal corporate governance, like its jurisprudence on the poison pill." He has more to say here.
UPDATE
Steve Bainbridge weighs in on the Delaware antitakeover statute discussion also, with a pretty detailed analysis of SCOTUS case law on point.
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