Opinion ID: 451604
Heading Depth: 2
Heading Rank: 1

Heading: Congressional Purposes

Text: 13 The Williams Act amendments to the Exchange Act were enacted in response to the growing use of tender offers to achieve corporate control. Edgar v. Mite Corp., 457 U.S. 624, 632, 102 S.Ct. 2629, 2635, 73 L.Ed.2d 269 (1982) (citing Piper v. Chris-Craft Industries, 430 U.S. 1, 22, 97 S.Ct. 926, 939, 51 L.Ed.2d 124 (1977)). Prior to the passage of the Act, shareholders of target companies were often forced to act hastily on offers without the benefit of full disclosure. See H.R.Rep. No. 1711, 90th Cong., 2d Sess. (1968), reprinted in 1968 U.S.Code, Cong. & Admin.News 2811 (House Report 1711). 2 The Williams Act was intended to ensure that investors responding to tender offers received full and fair disclosure, analogous to that received in proxy contests. The Act was also designed to provide shareholders an opportunity to examine all relevant facts in an effort to reach a decision without being subject to unwarranted pressure. House Report 1711. 14 This policy is reflected in section 14(d), which governs third-party tender offers, and which prohibits a tender offer unless shareholders are provided with certain procedural and substantive protections including: full disclosure; time in which to make an investment decision; withdrawal rights; and pro rata purchase of shares accepted in the event the offer is oversubscribed. 15 U.S.C. Sec. 78n(d) (1981); 17 C.F.R. Sec. 240.14d-6 (1984); 17 C.F.R. Sec. 240.14d-7(a)(1)-14d-7(a)(2) (1984). 15 There are additional congressional concerns underlying the Williams Act. In its effort to protect investors, Congress recognized the need to avoid favoring either management or the takeover bidder. Edgar, 456 U.S. at 633, 102 S.Ct. at 2636; see also Financial General Bank Shares, Inc. v. Lance, [1978] Fed.Sec.L.Rptr. (CCH) p 96,403 at 93,424-25 (D.D.C.1978) (quoting Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 58, 95 S.Ct. 2069, 2075, 45 L.Ed.2d 12 (1975)). The Supreme Court has recognized that to serve this policy it is necessary to withhold from management or the bidder any undue advantage that could frustrate the exercise of informed choice. Edgar, 456 U.S. at 634, 102 S.Ct. at 2636-37. Congress was also concerned about avoiding undue interference with the free and open market in securities. City Investing Co. v. Simcox, 633 F.2d 56, 62 n. 14 (7th Cir.1980) (noting less burdensome regulations in cases involving certain open market purchases); see also 113 Cong.Rec. 856 (1968). Each of these congressional concerns is implicated in the determination of whether CHH's issuer repurchase program constituted a tender offer.