Williams Act

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Williams Act

The Williams Act of 1968 amended the Securities and Exchange Act of 1934 (15 U.S.C.A. § 78a et seq.) to require mandatory disclosure of information regarding cash tender offers. When an individual, group, or corporation seeks to acquire control of another corporation, it may make a tender offer. A tender offer is a proposal to buy shares of stock from the stockholders for cash or some type of corporate security of the acquiring company. Since the mid-1960s, cash tender offers for corporate takeovers have become favored over the traditional alternative, the proxy campaign. A proxy campaign is an attempt to obtain the votes of enough shareholders to gain control of the corporation's board of directors.

Because of abuses with cash tender offers, Congress passed the Williams Act in 1968, whose purpose is to require full and fair disclosure for the benefit of stockholders, while at the same time providing the offeror and management equal opportunity to fairly present their cases.

The act requires any person who makes a cash tender offer (which is usually 15 to 20 percent in excess of the current market price) for a corporation that is required to be registered under federal law to disclose to the federal Securities and Exchange Commission (SEC) the source of the funds used in the offer, the purpose for which the offer is made, the plans the purchaser might have if successful, and any contracts or understandings concerning the target corporation.

Filing and public disclosures with the SEC are also required of anyone who acquires more than 5 percent of the outstanding shares of any class of a corporation subject to federal registration requirements. Copies of these disclosure statements must also be sent to each national securities exchange where the securities are traded, making the information available to shareholders and investors.

The law also imposes miscellaneous substantive restrictions on the mechanics of a cash tender offer, and it imposes a broad prohibition against the use of false, misleading, or incomplete statements in connection with a tender offer. The Williams Act gives the SEC the authority to institute enforcement lawsuits.

Further readings

Fleming, Rusty A. 2003. "A Case of 'When' Rather Than 'What': Tender Offers Under the Williams Act and the All Holders and Best Price Rules." Southern Illinois University Law Journal 27 (winter).

Tyson, William C., and Andrew A. August. 1983. "The Williams Act after RICO: Has the Balance Tipped in Favor of Incumbent Management?" Hastings Law Journal 35 (September).


Mergers and Acquisitions; Securities and Exchange Commission.

References in periodicals archive ?
A brief analysis of the passage of Williams Act, and its accompanying fundamental changes to the corporate governance landscape, demonstrates why changes to tighten the rules under 13(d) are unnecessary and potentially harmful to the overall economy.
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Unless these types of measures are taken, financial innovation will eventually render the Williams Act meaningless.
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The Opinion addresses all pending claims in the litigation with the exception of NRL's claim under the Williams Act that the tender offer (as amended on October 4, 2004) contains false and/or misleading statements.
Judge Graham held that these provisions as applied to Luxottica's tender offer were preempted by the Williams Act.
Separately, Purchaser, THSP and two affiliates filed a motion to dismiss the federal complaint filed by the Partnership and BMI-III on June 14, 1994 in which the Partnership and BMI-III alleged various violations of the Williams Act and the proxy rules and regulations.
and the Dirk Family Trust have commenced an action against Westar Capital LLC ("Westar") in the United States District Court for the Central District of California for violations of the Williams Act, tortious interference with contract, tortious interference with prospective economic advantage, and unfair business practices.
Defendants also violated the all-holders provision of the Williams Act by giving additional consideration to directors and officers of Digital Island, who were also shareholders, in excess of that given to other Digital Island shareholders as an inducement to support Cable & Wireless' Offer to Purchase.
District Court for the Southern District of New York, Emerson stated that Fidenas, among other things, consistently violated the Williams Act by not making the appropriate 13D disclosures about the identities of those who control and manage Fidenas; the sources of funds it used to purchase Emerson shares; and its plan and intentions to control Emerson.
7, Anago filed suit against Tecnol claiming: violation of the Clayton Anti-Trust Act, securities law violations under the Williams Act and other causes of actions.
The jury, empaneled in the United States District Court for the Eastern District of New York, found Computer Associates liable for violation of the Williams Act provisions of the Securities Exchange Act of 1934, 15 U.