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MASSACHUSETTS ANTI-TAKEOVER BILL APPROVED BY BOTH HOUSES

Executive Summary

MASSACHUSETTS ANTI-TAKEOVER BILL APPROVED BY BOTH HOUSES of the state legislature. The measure, which would make hostile takeovers of state companies more difficult, is expected to be signed by Governor Michael Dukakis (D) shortly. The bill had the backing of several Massachusetts-based companies and groups, including Gllette, Polaroid and the state's AFL/CIO. Called the "Massachusetts Control Share Acquisition Law," the legislation would deny anyone who buys, or offers to buy, 20% of the shares in a company the right to vote on those shares. The proposed Massachusetts law would not apply if disinterested holders -- those not affiliated with the acquiring party or the management of the target company -- decide to allow the shares to be voted. In addition, after a target company receives notice from the holder of a 20% block, it would have 50 days to hold a special stockholders' meeting to consider whether those shares should have voting power. Unlike Indiana's anti-takeover act, on which it is modeled, the Massachusetts bill applies both to companies incorporated in the state and those with substantial operations in Massachusetts. The latter provision applies to companies with executive offices in Massachusetts, companies with the bulk of their workforce or assets in the state or at least 10% of their shares owned by state residents (excluding shares held by brokers or nominees). The provision also applies to companies that have 10% of their shareholders living in the state.
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