A bill to amend the Clayton Act and the Securities Exchange Act of 1934 with respect to mergers and corporate tender offers, and for other purposes.

Summary

Amends the Clayton Act to apply premerger notification and waiting period requirements to proposed mergers where the total assets or annual net sales of the smaller of the acquiring party or the target party equal or exceed $15,000,000 (currently, $10,000,000) and the aggregate amount of voting securities and assets of the target party that the acquiring party would hold exceeds $25,000,000 (currently, $15,000,000). Eliminates the 15-day waiting period (and thus requires a 30-day waiting period) following notification of a proposed merger in the case of a cash tender offer. Permits disclosure of information and documentary material filed in a premerger notification to Federal and State law enforcement agencies for official law enforcement purposes. Defines a "person" for purposes of premerger notification and waiting period requirements to include, in the case of a partnership any general partner and any partner with an equity interest of 50 percent or more. Amends the Internal Revenue Code to impose an 80 percent excise tax on any "greenmail profits" paid to certain corporate stockholders. Defines "greenmail profits" as any amount exceeding the aggregate market value of stock realized by a five-percent shareholder in the corporation, if: (1) the shareholder held such stock for less than one year; and (2) during the year preceding the sale or exchange of such stock there was a public tender offer for such stock or a five-percent shareholder submitted a written proposal for a public tender. Specifies exceptions. Amends the Securities Exchange Act of 1934 to require any person whose acquisition results in ownership or more than five percent of an issuer's equity securities to send specified information to the issuer, the appropriate exchange, and the Securities and Exchange Commission within 24 hours (currently, ten days). Prohibits a common stock that is part of a class of an issuer's securities which is nonvoting or which carries disproportionate voting rights (entitling a share owner to cast more or less than one vote based on such share) from being registered on a national securities exchange or quoted on an automated quotation system operated by a registered national securities association. Sets forth a grandfather clause with respect to such disproportionate stock that was listed or quoted before enactment of this Act. Prohibits an issuer of securities, during a tender offer for such securities by anyone other than the issuer, from: (1) issuing a class of securities having exceptional rights as to voting, dividends, or the receipt of specified assets, to become effective upon the change of corporate control; or (2) granting an option for the disposition of corporate assets to a third party upon the change of corporate control. Amends the Internal Revenue Code to prohibit any income tax deduction for the amount of a parachute payment exceeding two times (currently, three times) an individual's average compensation. Increases the tax imposed on such an excess parachute payment to 50 percent (currently, 20 percent). Amends the Securities Exchange Act of 1934 to prohibit an issuer of securities. during a tender offer for such securities from other than the issuer, from entering into or amending an agreement in order to provide other than a routine increase in the current or future compensation of any officer of director. Prohibits any person, other than the issuer, from making a tender offer for any class of equity securities, if, after the further acquisition of securities, such person would own more than 20 percent of such class, unless the offer is a cash offer for all outstanding shares of the class. Includes as a "person" two or more persons acting together to acquire, hold, or dispose of securities of an issuer. Prohibits any registered company from knowingly issuing any security that will cause a reduction in the rating of that issuer's outstanding securities by a nationally recognized bond rating house. Subjects a bank that purchases noninvestment grade securities issued to finance the acquisition of securities to existing margin requirements by deeming such a purchase to be an extension of credit. Prohibits any officer, director, or employee of a registered company from acquiring all of the shares of a class of such company's equity securities, unless: (1) at least 60 days have elapsed since the proposed acquisition was publicly announced; and (2) the company has obtained an independent appraiser's report, which shall be disclosed to company shareholders, regarding the fairness of the valuation to be used in the proposed acquisition.

This text is taken from the official record. PoliticalRepo does not editorialize.

Timeline

1. 3 March 1987

   Introduced

   Read twice and referred to the Committee on Finance.

   Source: IntroReferral

2. 3 March 1987

   Introduced

   Introduced in Senate

   Source: IntroReferral

Votes

No vote records are attached yet.

Versions

No version snapshots stored. Document URLs remain at the source.

Documents

1 official file

• Introduced in Senate

  summary · EN · 3 March 1987

  Open at official source

Sponsors

• Sen. Specter, Arlen [R-PA] · R · Sponsor
• · ssfi00 · Standing

Related records

No cross-record relationships stored yet.