The Williams Act refers to the 1968 amendments to the Securities Exchange Act of 1934. It is designed to prevent companies from making unfair tender offers to investors. The law is the result of a proposal from New Jersey Senator Harrison A. Williams. Read on to learn more about the Williams Act and how it may affect your business. Listed below are the main sections of the Act:
Sections 13(d) and 13(e)
The two main arguments against the Williams Act’s injunction provisions are based on its separate obligations, and their overlapping nature. Section 13(d) allows a tender offeror to sue for injunctive relief, while Section 13(e) permits the issuer to bring a claim for damages. In either case, courts have interpreted the Williams Act’s separate obligations provisions by looking to the entire statute and congressional intent. In one case, the Supreme Court looked at the Exchange Act’s proxy solicitation provisions and concluded that Section 13(d) created a private right of action against the issuer.
Activist campaigns that seek to gain control of a company often fail to win, and the SEC’s proposed amendments to the Williams Act’s disclosure rules are an example of how the Act’s purpose can be diluted by activist litigation. As noted in Piper, 430 U.S. at 35, the SEC’s rules govern the timing of the public disclosure of equity positions. Specifically, shareholders must make public a position within 10 days of taking it.
Beneficial ownership disclosure under William Act
Under the Williams Act, any individual or entity that has more than five percent ownership of a class of equity securities must file a Schedule 13D with the SEC within 10 days. Investors can only communicate with a company if there is no other way to protect their interests. Under the law, a company is required to provide this information to the SEC, and it may be compelled to do so if a plaintiff alleges it violated the law.
The new Act also requires reporting companies to report any beneficial ownership information to FinCEN, which is the U.S. Treasury Department’s Financial Crimes Enforcement Network. The Act does not apply to entities that are involved in terrorism financing, proliferation financing, or serious tax fraud. However, it does protect American consumers and investors. The Act aims to prevent the emergence of a “shadow banking” industry. By requiring financial institutions to report on their customers and counterparties, they can be more confident about the information they provide.
Tender offers under William Act
Tender offers under the Williams Act refer to amendments made to the Securities Exchange Act of 1934 in 1968. Proposed by New Jersey Senator Harrison A. Williams, these amendments govern public tender offers. They have been in effect ever since. However, there are some nuances involved with tender offers under the Williams Act. In this article, we will review these differences and explain how they affect tender offers under the Williams Act.
First, the Williams Act adds a few provisions to the Exchange Act. The Act addresses matters such as tender offers, changes in control and beneficial ownership disclosure. Sections 13(d) and 14(e) of the Exchange Act govern tender offers. They require companies to disclose the ownership of each of their securities before offering them to the public. These provisions also require tender offers to be made in a timely manner.
Changes in control
The Williams Act was implemented in 1992 to regulate changes in controlling interest in U.S. corporations. The original intent of the Act was to prevent takeovers through enforcing coercive tender offers. But with the advent of new corporate governance practices, the Williams Act has been rendered largely useless. Shareholders today are more educated and active than they were 50 years ago, and they have more information at their fingertips than ever.
To make a hostile bid, the acquiring company must submit a declaration of intent and initiate a tender offer. The hostile bidder must provide the target business with all information relevant to its tender offer, including details of cash source and plans for the company after the takeover. Once the tender offer has been made, the new owners of the target company will need to submit a full disclosure to avoid any legal issues.
