Williams Act Definition
The Williams Act is a federal law that was enacted to protect investors from non statutory takeovers by corporate raiders that allow cash tender offers for already-owned stocks. A corporate raider is a financier that makes hostile takeover bids for companies, so as to gain control over them or exchange them for a profit. The Williams Act was enacted in 1968, it contains federal laws on how offers can be acquired and/or tendered.
This act was proposed by Harrison A. Williams. After is was passed, the act mandated that information about takeover bids are disclosed and filed to the Securities and Exchange Commissions (SEC). The disclosure must include every detail of a tender offer.
A Little More on What is the Williams Act
The Williams Act of 1968 contains provisions that stipulate the period of time in which a tender offer may be open and time constraints on shareholders’ decision. A consistent wave of hostile and unannounced takeovers in the 1960s led to the enactment of Williams Act. This act give protection to investors and shareholders from the risks of unannounced takeovers.
Aside from the enactment of this act, the United States legislators also amended the 1934 Securities Exchange Act to secure all parties involved in takeovers. The Williams Act mandates an entity making cash tender offer to make a full disclosure of the details of the offer. This is to protect shareholders and investors and to achieve transparency in cash tender offer.
Over 50 years after the Williams Act was enacted, experts have begun to call for a review of the Act because it is high time the act is updated. One of the reasons for a call for a detailed review of the Act is its inefficiency in addressing hostile and coercive tender offers.
Also, because trading companies have drastically evolved over the years, there is need to update the William Act. The evolution of shareholders with different trading dispositions from those of the corporate raiders is another reason to review the act.
References for Williams Act
Academic Research on the Williams Act of 1968
The Scope of the Williams Act and Its 1970 Amendments, Brown, M. M. (1970). Bus. Law., 26, 1637.
Misreading the Williams Act, Johnson, L., & Millon, D. (1989). Michigan Law Review, 87(7), 1862-1923.
Target abnormal returns associated with acquisition announcements: Payment, acquisition form, and managerial resistance, Huang, Y. S., & Walkling, R. A. (1987). Journal of Financial Economics, 19(2), 329-349.
The returns to acquiring firms in tender offers: Evidence from three decades, Jarrell, G. A., & Poulsen, A. B. (1989). Financial management, 12-19.
From MITE to CTS: State Anti-Takeover Statutes, the Williams Act, the Commerce Clause, and Insider Trading, Fischel, D. R. (1987). The Supreme Court Review, 1987, 47-95.
Defensive Take-over Procedures Since the Williams Act, Kennedy, W. M. (1969). Cath. UL Rev., 19, 158.
Section 14 (e) of the Williams Act and the Rule 10b-5 Comparisons, Loewenstein, M. J. (1982). Geo. LJ, 71, 1311.
Standing to Sue Under the Williams Act After Chris-Craft: A Leaky Ship on Troubled Waters, Pitt, H. L. (1978). The Business Lawyer, 117-192.
The Williams Act, Public Law 90-439-Growing Pains-Some Interpretations with Respect to the Williams Act, Griffin Jr, P. J., & Tucker, J. R. (1970). Howard LJ, 16, 654.
Government regulation and structural change in the corporate acquisitions market: The impact of the Williams Act, Malatesta, P. H., & Thompson, R. (1993). Journal of Financial and Quantitative Analysis, 28(3), 363-379.
Changing the takeover game: The Securities and Exchange Commission’s proposed amendments to the Williams Act, Fogelson, J. H., Wenig, J. R., & Friedman, B. P. (1980). Harv. J. on Legis., 17, 409.