The missing link in sarbanes-oxley

Enactment of the "change of control board" concept, or extension of the audit committee provisions to mergers and acquisitions

Research output: Contribution to journalReview article

Abstract

To address (1) the conflicts of interest that can arise in the acquisition of publicly held target corporations in various types of hostile and consensual merger and acquisition ("M&A") transactions, and (2) the risk of overpayment in major acquisitions by publicly held acquirors, Congress should require the appointment by the U.S. Securities and Exchange Commission ("SEC") of a disinterested Change of Control Board for such targets and acquirors. This Board would have complete authority over the acquisition process, and a federal uniform standard of review, the business judgment rule, would apply in determining if the Board acted properly, thereby significantly reducing litigation in M&A transactions. Many features of the Change of Control Board proposal are similar to those provided for audit committees in the Sarbanes-Oxley Act of 2002; thus, this proposal is a logical extension of those audit committee provisions. In the event Congress does not enact the Change of Control Board proposal, many of the concepts underlying the proposal should be implemented by the SEC through its rulemaking authority under the audit committee provisions.

Original languageEnglish (US)
Pages (from-to)81-123
Number of pages43
JournalBusiness Lawyer
Volume63
Issue number1
StatePublished - Nov 2007

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merger
audit
acquisition
transaction
conflict of interest
corporation
act
event
Audit committee
Mergers and acquisitions
Sarbanes-Oxley
Enactment
Authority

All Science Journal Classification (ASJC) codes

  • Organizational Behavior and Human Resource Management
  • Law

Cite this

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