Is Mandatory Bid Rule optimal? Law & Economics analysis

Abbreviations.

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UK – United Kingdom

EU – European Union

HLGCLE?- High Level Group of Company Law Experts

OSOV - one-share-one-vote

CEMs – Control-enhancing mechanisms

CJEU – Court of Justice of the European Union

US - United States

I.??????????????????Introduction.

The unification of the takeover rules is different in different regions. While in Europe, we have mandatory rules with respect to how we approach takeovers, this is relatively open to the market in the US. There are, of course, several rules that they also have to comply with, but they do not really have mandatory bid rules like we have embedded in our legislation. In Europe also, until 2005, everything was voluntary, meaning there was no such thing as a mandatory bid at EU-level. Now in all over Europe, we have a mandatory bid rule, which means that if you pass a certain threshold in acquiring a number of shares in a listed company, it will then be mandatory to offer all the other shareholders the opportunity to sell the shares to you. However, this threshold has not been harmonized all over Europe, but is frequently found around 30%.[1] As soon as you acquire 30% of all the shares, you will then have to mandatorily offer the other 70% of shareholders the possibility to sell the shares. The idea behind this is that you grab control of the company, which creates a completely different ownership structure, and hence you cannot expect the shareholders who previously entered into the company, who also had information that it had a completely different structure, to now accept a completely new structure. Therefore, you have to offer them the opportunity to get out. This is the feature that we are familiar with here in Europe. But that does not exist in many other countries. The United States is a perfect example. But there are still corporate raiders in these countries voluntarily offering the other shareholders the opportunity to sell their shares without any mandatory rule saying they have to do so.

??????One of the effects of having a voluntary system in other countries is that the bidder can set the way he is going to structure the bid. For instance, he can simply say, I will accept all the people who are willing to sell shares up to a certain threshold, like 55%, and the moment I reach 55%, I stop the bid. However, this is not possible in Europe any longer.

??????Hence, since its adoption, the existence of the mandatory bid rule has triggered a heated debate among the lawyers and the law & economics scholars concerning whether the rule should have been the priority to harmonize at the Union-level and its consequences for the takeover market. In this paper, we will argue that the inclusion of the mandatory bid rule in the Takeover Directive as a hard law was unnecessary because alternative, more flexible, market-based ways were available. Also, it caused inefficiency for society, since otherwise value-increasing takeovers are prevented from taking place as a result of the rule.

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II.???????????????Methodology and Disposition.

?????????????For the purposes of answering the main research question set above, the author will use the law and economics method to analyze if the mandatory bid rule is an optimal rule. Law & Economics analysis will help us determine whether the rule offers any efficiency in the real world. This is an approach widely used among the Law & Economics scholars in order to define the real-life consequences of any law instead of how it looks on paper.

?????????????Accordingly, Chapter III will be dedicated to the historical roots of the mandatory bid rule, where it was invented, and how it ended up becoming a statutory EU Law as part of the Takeover Directive. We will then move on to the analysis of the mandatory bid rule from both a necessity and efficiency point of view in Chapter IV. In the first part, it will be detailed whether there was a need to have a harmonized mandatory bid rule as a statutory obligation in the EU, while the second part will reveal the inefficiencies associated with its mandatory nature. Chapter V will wrap up Chapter IV's findings and provide an explanation for the reason why the rule even exists given that it is completely unnecessary and inefficient.

?????????????In the Conclusion, the main issue that caused the problem and what the European Union can do to prevent it will be emphasized.

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III.?????????????The history of mandatory bid rule in Europe.

The mandatory bid rule, which is now Article 5 of the Takeover Directive (2004/25)[2] takes its roots from the identical provision of the UK Takeover Code. Both provisions have been devised in order to ensure the equal treatment of all shareholders, according to which, upon acquiring a substantial amount of the shares enabling control over the company, the bidder must offer a fair price to all the remaining shareholders to give them a chance to exit the company. What is meant by control and fair price has not been harmonized, however, and therefore they vary among the EU Member States and the UK.

A similar rule existed also in Germany, one of the biggest countries in continental Europe. According to the Law on Group of Companies, the shareholder should be given the right to exit the company following the commercial transaction triggering the change of control.[3] Contrary to the fair price criteria adopted in the UK, it was determined that the minority shareholder should be paid an equivalent amount to the value of his/her shares. Also, while the emergence of the Mandatory Bid Rule in the UK originated from "equal treatment" of all the shareholders, as the change of control should offer the same value to all the shareholders irrespective of their stake in the company, Germany perceived the change of control as something detrimental to the minority shareholders, who have to be allowed to leave the company without incurring any loss. Even though the rationale behind the rule has been different in two major European countries, the very existence of the rule in these two states alleviated the further harmonization of the said rule at the Union level, while most of the other countries were not even aware of it back then.[4]

The first proposal to adopt the Takeover Directive was put to a vote in 2001, which was defeated by a tie in the European Parliament.[5] The opposition came from those member states, particularly Germany, that did not reconcile with the anti-frustration obligation of the management of the companies. At that time, Germany had a statutory rule obliging the management board to take into account not only the interests of the shareholders but also the company as a whole, thus allowing the board to adopt defensive measures to frustrate the bid if the latter’s interests deteriorated.[6] On the other hand, the scope of the proposed law was deemed to touch upon the corporate laws of the Member States, which were not open to harmonization at all. Oddly enough, opposition did not come to the mandatory bid rule but rather focused on the existence of the non-frustration obligation.

The improved second proposal for the Takeover Directive was prepared by the High Level Group of Company Law Experts (HLGCLE) and introduced in 2002,[7] only a few months after the defeat of the first proposal.[8] The new law also contained the non-frustration obligation in addition to some novel provisions, one of which was the brand-new break-through rule, which required the companies to suspend deviations from the so-called one-share-one-vote (OSOV) system once the takeover bid was launched. While the inclusion of the non-frustration rule frightened Germany, the suspension of the OSOV system was resented by the Scandinavian countries, which were known for their use of these control-enhancing mechanisms (CEMs).[9] Thus, the new proposal did not only come with novelties; it also increased the opposition by the Member States. As a last resort, it was agreed to make the non-frustration and the breakthrough rules optional upon the introduction of the opt-in regime. Nevertheless, the mandatory bid rule was not touched upon.

Even so, an assessment by the Commission in 2007 suggested the directive had not been successfully transposed into the domestic laws of the member states.[10] Furthermore, according to the findings of the Report for the Commission prepared by Marccus Partners and the Center for European Policy Studies in 2012, the Directive has not led to any success as a similar system was already in place in Member States, so it was rather difficult to talk about any credible economic growth associated with the new rule.[11] It is true that the Directive has been effective in a way that it has been applied frankly in most cases in the Member States. However, the effectiveness of the rule does not imply its efficiency as improving the economic pie in the Union. In contrast, the report affirmed that the rule has evolved into an effective anti-takeover device that is put into effect once the management is not willing to lose the company. This creates the contradiction that the rationale behind the directive was to create an environment where the reorganization of companies would flourish as a result of takeovers. It has been argued that the purpose of the mandatory bid rule is not to increase efficiency, but to create a balance between the vibrant takeover environment and the interests of the minority shareholders, and thus it is needed as an effective protection ensuring equal treatment. This perception that the rule had to be adopted as a means of effectively securing the interests of the minority shareholders, however, will be challenged in this paper.

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IV.????????????An analysis of mandatory bid rule.

A.????Is it necessary to have a harmonized mandatory bid rule in the EU?

There was definitely a time when the EU was committed to harmonizing everything that could be harmonized at the Union level. However, as time proved, the areas that could be dealt with better by the member states alone should remain within their competencies. It is no surprise that once adopted with high expectations, the 5th and 9th Company Law Directives were abandoned as a result of the same lesson. The EU Commission finally came to the conclusion that the corporate governance of the Member States cannot be easily harmonized while the CJEU has allowed the citizens of the EU to incorporate their companies in any Member State whose corporate law seems more appealing to them.[12] Therefore, the Commission at some point put an end to its attempts to harmonize the company laws of the Member States, thus allowing them to set up their own legal systems on the issue.[13]

If the above-mentioned lesson had been learned a bit earlier, the Takeover Directive would probably not be adopted at all or would deal with the different issues while increasing the efficiencies in a timely manner. The right directive could cover the problems that come up because the takeovers happen across borders and involve more than one Union country. Also, the formalities such as the form of the bid, its publication, the relevant time for its assessment, and clear requirements for the bid could be the reasonable and well-defined objects of a successful directive. Instead, the EU chose the path of interfering with the duties of the management and the shareholders once the takeover bid is launched. There is no doubt that the EU went down that road with the best of intentions: to get rid of anything that was getting in the way of the creation of a borderless internal market. However, it is nothing but naive to impose the same behavior on its member states while their cultures, languages, and legal origins are different.

Hence, it is questionable if the mandatory bid rule was necessary at all, given all the complexities and diversities. The same also goes for other far-reaching obligations such as anti-frustration and break-through rules. It would be a better strategy to leave the adoption of the said rules to the Member States to decide. Member States, in their own turn, could decide to regulate the takeover bids by determining such specific rules or leave it to the market completely.

Moreover, it is noteworthy that the origin of the mandatory bid rule comes from the soft law of the UK, which was not mandatory but perceived as the best practice to comply with. By adopting the same rule as a statutory obligation through the Directive on Takeover Bids, the EU has gone far. It was only after the adoption of the Directive that the UK had to change its rule to the hard law.

An alternative way, if we think about it, could be to leave this decision to the market. In other words, the shareholders could have incorporated the mandatory obligation to offer purchasing of the remaining outstanding shares once control over the company is acquired into the Articles of Association. In that case, shareholders would have the flexibility to choose if they want the mandatory acquisition of all the shares upon reaching a certain threshold, enabling control over the company, instead of the hard law obliging them to do so. Ultimately, the market itself would direct the companies to adopt the most efficient approach in their Articles of Association. Consequently, it was not necessary to come up with a mandatory bid rule as an EU law.

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B.????Is the mandatory bid rule efficient?

The logic behind takeovers as a means of market control is that when a company is underperforming, a corporate raider who believes he or she can do better comes along and buys enough stock to replace the current management, thus restructuring the board and ensuring better performance. By obliging the corporate raider to acquire all the shares once he has obtained sufficient shares to exercise control of the company, the EU has prevented the number of takeovers. This is obvious since the raider now needs to buy all the shares due to the mandatory bid rule, whereas in the absence of the obligation he could take over the company with relatively less finance, allowing him to buy the shares enough to get control over the company. Now with the introduction of the mandatory bid rule, even prior to launching the bid, he should prove to the domestic authority that he owns enough resources to finance all the shares of the company. Apparently, this disincentives the shareholders from launching takeover bids since it is now more costly to acquire control. Therefore, as shown by the 2012 Study by Marccuss Partners and CEPS,[14] the mandatory bid rule has evolved to be a powerful antitakeover device. Subsequently, the mandatory bid rule stifles the takeover market, or, in other words, prevents the allocation of resources to those who could do better with the said resources (the company and its assets), thus causing inefficiency in the market.

It should be noted that, like any businessman, a corporate raider is in the takeover market to make a profit. Hence, assuming that the restructuring of the company after a successful takeover will yield him some profitability (P), but he will also incur some costs to get control over the company (Cc), he will be interested in launching the bid only if the expected profitability (P) is bigger than the cost of acquiring control (Cc):

???????????????????????????????????????????????????????????????????????P > Cc

In this case, the bidder will take the shortcut by offering to buy the shares of the majority shareholders in order to decrease the transaction costs of negotiating with more incumbent shareholders. However, as the mandatory bid rule is aimed at protecting the interests of the minority shareholders by giving them a chance to exit the company due to a change of control, now the bidder must incur additional costs for buying the remaining shares. Hence, the situation has deteriorated for the bidder in such a way that the takeover will only take place if the profitability of the takeover (P) is now bigger than the cost of control (Cc) plus the cost of financing minority shareholders (Cm):

??????????????????????????????????????????????????????????????????????P > Cc + Cm

Evidently, we can observe that with the mandatory bid rule, the cost of acquiring control has increased for the bidder, which will naturally decrease the number of takeovers. On the contrary, if the takeover occurred and the company was restructured in a way that its value (profitability) increased, this would result in efficiency. Because of the mandatory bid rule, the prevented takeovers can now be formulated as follows:

??????????????????????????????????????????????????????????????????????Cc < P < Cm

This implies that if no rule was present, this takeover would take place. We should not be deceived into thinking that this is only a loss to the shareholders, who could otherwise benefit from the newly restructured profitable company, since any suboptimal use of the resources by the underperforming firm is also a pure loss to society.

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V.???????????????Despite its undisputed inefficiency, why does the rule still exist?

While it is clearly an inefficient rule, the question arises as to why the lawmakers are still persistent in safeguarding it. The reason is straightforward: some parties participating in today’s corporate world, namely management boards, especially in dispersed ownership structures (widely spread in common law jurisdictions), politicians, and institutional investors, are eager to have the rule for their own goals. It is true that basic microeconomics proves that rule creates inefficiency for society, but it is favorable for the said groups for different reasons, which will be further analyzed below.

A.????Management Boards

As already described in Chapter I, the rule first originated in the UK; however, in order to understand the desirability of the mandatory bid rule among British businessmen, we need to examine thoroughly the creation of the law and the period of its first emergence.

The UK moved to a capital markets system following the great amalgamation of converting family-owned entities to public companies during 1920–1930.[15] By 1950, the typical feature of public companies in the UK was to have dispersed ownership among shareholders with highly independent directors and management. It was at that time that this independence started to cause problems for efficient takeovers to take place. As a characteristic feature of the dispersed ownership, management got stronger while the monitoring by the atomic shareholders got weaker.[16] The effect of this development on takeovers resulted in the emergence of what is called today "hostile takeovers" where management would oppose the takeover bid, considering that it would not necessarily be bad as such for the shareholders of the company.[17]

This further went very far in the Savoy Hotel Affair in the mid-1950s, where the actions taken by the management were perceived as excessive and the measures to be adopted to prevent this came to scene.[18] Accordingly, two different courses of action were proposed. One came from the Bank of England in 1959, which issued its Notes of Amalgamation, which detailed how the target company should behave once the takeover bid is launched. According to the Notes, the takeover bid should be applied to the company as a whole, which could be seen as the first seeds of today’s mandatory bid rule. However, the main difference was that this rule was applicable only to authentic takeovers and not to the acquisition of control by other means. The other approach was suggested by the Labor Government, which proposed legislation concerning the issue at stake as feared by the positions of the employees in takeover cases.[19] In order to prevent this, the Bank of England reopened its Notes of Amalgamation in 1963, which was a good step not to rush into adopting the hard law. However, the events of 1967, in which the management boards frustrated control transactions, put pressure on them to go along with the obligatory legislation. This trend was halted by the establishment of the City Panel in order to monitor the businesses’ behaviors and the adoption of the City Code, which substituted the preceding Notes of Amalgamation as a form of self-regulation.[20] The Code provided the ban on the frustration of the control transactions, which later on included the mandatory bid rule in 1972, as it stays today.

The mandatory bid rule solidified the idea that management should be "independent" and that shareholders should not exercise control over it other than by appointing management at the AGM and then discreetly distancing themselves to let them conduct business as usual.[21] It's clear that this idea of management independence still exists in UK legislation because the mandatory bid requirement is applied to "board control seeking proposals”.[22] The idea of independence from shareholders remains essential to the UK Corporate Governance Code, despite efforts to codify ?enlightened shareholder value? in the 2006 Companies Act.[23] UK Code appears to have inspired the Commission Recommendation (2005/162), and as many Member States consider the Commission's recommendations practically binding, it has found its way into similar Member State CG Codes where this approach may not be appropriate at all; another example of the dangers of corporate governance harmonization.[24]

Thus, it would seem, at least to a foreigner, that despite the City Panel's creation in 1968, the corporate community's desire for independence from shareholder influence—which had produced the Savoy Hotel Affair and other scandals in the years prior—had not diminished.[25] Contrarily, by expanding on portions of the prior Notes on Amalgamation that were meant to strengthen shareholder control, it was possible to introduce a rule only a few years later that had the outward appearance of protecting shareholders but actually served to shield incumbent management from shareholder interference. This is true, of course, except in cases of direct and open takeover bids, which it would have been impossible to openly block under rules dedicated to this purpose.[26]

B.????Politicians support the rule.

The mandatory bid rule also finds huge support among the politicians.[27] They advocate the existence of the rule as a fair and necessary measure to protect minority shareholders as described above. The ulterior reason, however, is different. In most cases, following a successful takeover and restructuring, there are always redundancies and layoffs. Even though successful takeovers and the subsequent productive operation of the company as a result of the restructuring bring about economic efficiency and growth, these become obvious potentially at the end of each annual period, while massive layoffs are something to complain of everyday. Therefore, politicians are inclined to be concerned about the daily opinion among their voters rather than looking at the big picture and seeing the long-term profits. It must be enticing to accept the mandatory rule as a tool for minority protection while ignoring the fact that it frequently serves as an antitakeover mechanism that preserves the status quo.[28]

C.????Some investors favor the rule.

Institutional investors are required to put money into companies and become minority shareholders in many countries. Therefore, it is natural for the institutional investors to desire obliging the bidder pay them a higher price than they paid themselves for acquiring the very same shares. Institutional investors range from hedge funds to pension funds, so it would be misconceived to generalize them, but it is true that a large block is in favor of the mandatory bid rule and against the CEMs. It is obviously due to the fact that the bidder can stop the bid once he/she is already the majority shareholder, which is against to the interests of the institutional investors.

?????????????Institutional investors rarely engage in the operational activities of the company, since they invest in a wide range of portfolio companies. Therefore, they fear the shareholders, who do engage in the daily activities of the companies, thus obtaining the controlling stake. It is true that disproportionately strong and independent management also bears the risk of deterioration of the position of the small shareholders, including the institutional ones; however, institutional investors prefer having all the shareholders unable to exercise control over the company.[29]

?????????????It is plausible that not only the institutional investors support the mandatory rule, but also the rule is favorable by the non-professional (amateur) investors. This is certainly obvious since non-professional investors buy shares hoping to gain some profits through the potential productivity of the company. As the mandatory bid rule dictates to pay the same price to all the shareholders, and it absolutely comes with a certain premium, this is absolutely a "win" for the non-professional investors who are in such a business with a tiny share where professionals win at the end of the day in almost all cases. Therefore, the mandatory bid rule creates a business environment where amateur investors are incentivized to buy the shares as an investment and hope that their company will be taken over one day in the future.

?????????????This argument can easily be rebutted, however. Firstly, the question arises as to why retail investors should be given an incentive to "play the lottery" by investing their savings in heavily income taxed stocks. It is preferable to allow them to invest through professionally advised collective investment schemes. No extra help should be given to those who insist on going it alone. Secondly, it should not be forgotten that the mandatory bid rule prevents efficient takeovers from taking place and protects unproductive managements. Therefore, the rule has detrimental effects on the stock market and the corporate governance of the Member States. If the lawmakers are really interested in incentivizing the retail investors, there is a shortcut to do so: instead of letting them play a lottery by investing in stock and awaiting the takeover, which rarely occurs, provide them tax-cutting schemes on shares.

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Conclusion.

In this essay, it is concluded that the mandatory bid rule truly serves as an antitakeover device that is not necessary to adopt as hard law at the union level and also is not efficient since its existence halts the value-increasing restructuring of the companies, thus badly effecting the whole society. It is supported only by certain stakeholders for their own self-interests rather than the unselfish reasons described in Chapter V.

However, it is clear that the EU is not going to reopen the Takeovers Directive or adopt the new law setting up a more efficient takeover market. Even if it is, the parties benefiting from its existence for almost 15 years now will strongly oppose the cancellation of the mandatory bid rule. Therefore, the question arises: knowing its status even after, why make a fuss?

?????????????The mandatory bid rule has been condemned since its inclusion in EU law, and it seems to continue for a while from now. The only hope is to see the CJEU, when the case comes before it, recognize the wide discretion of the Member States to adopt the limitations to it.

?????????????Further, and probably more essentially, the mandatory bid rule should not have made its way into the Directive. EU has to abandon the attitude of harmonizing every aspect of corporate governance, which brings more problems than it is worth. And this is true not only for the mandatory bid rule but also for the anti-frustration and break-through rules defined in the said Directive.

If one of the member states of the Union decided that it did not want to abide by the mandatory bid rule, then that state should be permitted to do so. The fact that this cannot be done in the present day – due to the fact that the rule is incorporated into the Directive, which gives it the status of mandatory EU law – is both regrettable and illustrative of the problems that have arisen within the Union.

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Bibliography.

[1] Clerc, Christophe, Demarigny, Fabrice, De Manuel, Mirzha and Valiante, Diego, A Legal and Economic Assessment of European Takeover Regulation (December 11, 2012).

[2] Takeover Directive 2004/25/EC

[3] L Hansen, The Mandatory Bid Rule: The Rise to Prominence of a Misconception, pp. 173-192 in 45 Scandinavian Studies in Law, Company Law (2003) p.177-179.

[4] Report on Takeovers and Other Bids, doc. XI/56/74

[5] R Skog, The Takeover Directive – an endless saga?, 13 EBLR 301 (2002)

[6] JL Hansen, If at first you don’t succeed: Reconsider! – The Regulation of Takeovers within the European Union, 5 Europar?ttslig Tidsskrift 435 (2002) p. 436‐437.

[7] Report on issues related to takeover bids, Brussels, 10 January 2002.

[8] Commission proposal, COM (2002) 534, Brussels, 2 October 2002.

[9] 2014 Lekvall Report, available at SSRN.com at < https://ssrn.com/abstract= 2534331 >

[10] Commission, Report on the implementation of the Directive on Takeover Bids, SEC(2007) 268, Brussels, 21 February 2007.

[11] Marccus Partners & CEPS, A Legal and Economic Assessment of European Takeover Regulation (2012).

[12] Weil, Gotshal & Manges, Comparative Study Of Corporate Governance Codes (January 2002); the Winter Report, Report of the High Level Group of Company Law Experts on a Modern Regulatory Framework for Company Law in Europe (November 2002), and the Reflection Group, Report on the Future of EU Company Law (April 2010).

[13] C‐212/97, Centros; JL Hansen, The Vale Decision and the Court’s Case Law on the Nationality of Companies, 10 ECFR 1 (2013).

[14] Marccus Partners & CEPS, A Legal and Economic Assessment of European Takeover Regulation (2012).

[15] A Johnston, Takeover Regulation: Historical and Theoretical Perspectives on the City Code, 66 Cambridge L J 422 (2007) at p. 423.

[16] AA Berle & GC Means, The Modern Corporation and Private Property, (1932, Macmillan, New York) at p. 244. R Skog, Does Sweden Need a Mandatory Bid Rule? (1995, Juristf?rlaget, Stockholm) pp. 44-47

[17] A Johnston, Takeover Regulation: Historical and Theoretical Perspectives on the City Code, 66 Cambridge L J 422 (2007) at p. 428

[18] A Johnston, Takeover Regulation: Historical and Theoretical Perspectives on the City Code, 66 Cambridge L J 422 (2007) at p. 429.

[19] A Johnston, Takeover Regulation: Historical and Theoretical Perspectives on the City Code, 66 Cambridge L J 422 (2007) at p. 431

[20] A Johnston, Takeover Regulation: Historical and Theoretical Perspectives on the City Code, 66 Cambridge L J 422 (2007) at p. 442, n. 95.

[21] Hansen, Jesper Lau, The Mandatory Bid Rule: Unnecessary, Unjustifiable and Inefficient (January 26, 2018). Nordic & European Company Law Working Paper No. 18-01, University of Copenhagen Faculty of Law Research Paper No. 2018-54, p. 21

[22] UK Takeover Code Rule 9, Note 2

[23] Rule Provision B.1.1 of the UK Corporate Governance Code according to which "independence" and the representation of "a significant shareholder" are incompatible. Rule Provision B.1.2 states that at least half of the board members must be in this sense "independent."

[24] JL Hansen, Active Owners and Accountable Directors, in Birkemose, Neville & Engsig S?rensen, Board of Directorsin European Companies, (2013, Wolters Kluwer) pp. 243‐261.

[25] Hansen, Jesper Lau, The Mandatory Bid Rule: Unnecessary, Unjustifiable and Inefficient (January 26, 2018). Nordic & European Company Law Working Paper No. 18-01, University of Copenhagen Faculty of Law Research Paper No. 2018-54, p. 22

[26] Hansen, Jesper Lau, The Mandatory Bid Rule: Unnecessary, Unjustifiable and Inefficient (January 26, 2018). Nordic & European Company Law Working Paper No. 18-01, University of Copenhagen Faculty of Law Research Paper No. 2018-54, p. 22

[27] Resolution of the European Parliament, Legal Committee, Report, A7‐0089/2013, 25 March 2013, para. 13.

[28] Hansen, Jesper Lau, The Mandatory Bid Rule: Unnecessary, Unjustifiable and Inefficient (January 26, 2018). Nordic & European Company Law Working Paper No. 18-01, University of Copenhagen Faculty of Law Research Paper No. 2018-54, p. 22

[29] S Thomsen & M Conyon, Corporate Governance: Mechanisms and Systems, 98‐100 (2012, McGraw‐Hill Education and DJ?F Publishing).