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²⁴ Ibid, p 24. Armstrong notes the widespread use in Victorian England of salaried managers who ‘were often engineers by the standards of the day’: Armstrong, P ‘Changing management control strategies: the role of competition between accountancy and other organisational professions’ (1985) 10 Accounting, Organizations and Society 129 at 138CrossRefGoogle Scholar.

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²⁹ Ministry of Reconstruction Scientific Business Management, Reconstruction Problems 28 (London: HMSO, 1919)Google Scholar.

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⁴⁰ As Marris pointed out, shareholders could only remove a senior manager below board level by threatening to replace a majority of the directors with their nominees: Marris, R The Economic Theory of ‘Managerial’ Capitalism (London: Palgrave Macmillan, 1964) p 16CrossRefGoogle Scholar. This was practically impossible before 1948.

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⁴² Companies Act 1906, Table A, Art 86; Companies Act 1929, Table A, Art 80.

⁴³ Companies Act 1862, s 55 and Companies Act 1908, s 69(1) and (2). A special resolution also required a second meeting to confirm the decision by simple majority until 1929: see Companies Act 1862, s 51 and Companies Act 1908, s 69(2). The Companies Act 1929 dispensed with the requirement of a second meeting for a special resolution. As Mr Justice Cohen observed, the directors tended to hold all the proxies for the general meeting: see Minutes of Evidence Taken Before the Company Law Amendment Committee (London: HMSO, 1943–1944) para 7071Google Scholar.

⁴⁴ Cheffins (2008), above n 7, pp 130 and 278. This had not been a listing requirement in 1906: see Rules and Regulations of the London Stock Exchange (London: The Stock Exchange, 1906)Google Scholar set out in Davis, L, Neal, L and White, EN ‘How it all began: the rise of listing requirements on the London, Berlin, Paris, and New York stock exchanges’ (2003) 38 The International Journal of Accounting 117, Appendix ACrossRefGoogle Scholar.

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⁴⁶ Guinnane, TW, Harris, R and Lamoreaux, NR ‘Contractual freedom and corporate governance in Britain in the late nineteenth and early twentieth centuries’ (2017) 91 Business History Review 227 at 244CrossRefGoogle Scholar.

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⁴⁸ Hannah, above n 8, at 415–417.

⁴⁹ Companies Act 1862, Table A, Arts 58, 60 and 61; Companies Act 1906, Table A, Arts 78, 80 and 81; Companies Act 1929, Table A, Arts 73, 75 and 76 (providing for re-election by default). Guinnane et al, above n 46, p 10 suggest that this was perhaps to ensure continuity in management of the enterprise.

⁵⁰ Imperial Hydropathic Hotel Co v Hampson (1882) 23 CD 1Google Scholar; see also Report of the Committee on Company Law Amendment (Cm 6659, 1945) (Cohen Report) para 130.

⁵¹ In Guinnane et al's samples, 64% of their sample of companies registered in 1892 and 92% of their sample from Burdett's Stock Exchange Official Intelligence (1892) made provision along these lines: Guinnane et al, above n 46, at 244.

⁵² Companies Act 1906, Table A, Art 72; Companies Act 1929, Table A, Art 68. In Guinnane et al's (ibid) 1912 and 1927 samples virtually all companies adopted this provision. By default, the general meeting could remove a managing director or manager from his position by simple majority, with 44.9% and 62% of companies in Guinnane et al's 1912 and 1927 samples adopting this provision. Presumably the directors could simply reappoint the managing director or manager in the unlikely event of removal by the general meeting.

⁵³ This was common where a business was incorporated for the first time: see Palmer, FB Company Precedents for Use in Relation to Companies Subject to the Companies (Consolidation) Act, 1908 vol 1 (London: Stevens, 1912) pp 981–982Google Scholar.

⁵⁴ Guinnane at al, above n 46, p 20.

⁵⁵ Franks, J, Mayer, C and Rossi, S ‘Spending less time with the family: the decline of family ownership in the United Kingdom’ in Morck, R (ed) A History of Corporate Governance around the World: Family Business Groups to Professional Managers (Chicago: University of Chicago Press, 2005) pp 595–597Google Scholar showing that, between 1919 and 1939, ‘on average, two thirds of the target directors remained on the target's board after the acquisition’.

⁵⁶ See for example Hannah, L The Rise of the Corporate Economy (London: Methuen, 1976) pp 86–87Google Scholar; Franks et al, above n 55, p 584.

⁵⁷ Walker, JD and Watson, Investor's and Shareholder's Guide (Edinburgh: E&S Livingstone, 1894) pp 142–143Google Scholar.

⁵⁸ Stiebel's 1920 book simply stated that the articles ‘should empower the company to remove directors by extraordinary or special resolution’: see Stiebel, A Company Law and Precedents (London: Sweet & Maxwell Ltd, 2nd edn, 1920) pp 396 and 423Google Scholar.

⁵⁹ Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame [1906] 2 Ch 34; Quin & Axtens Ltd v Salmon [1909] AC 442 at 443–444.

⁶⁰ See the decisions of the Court of Appeal in both Cuninghame [1906] 2 Ch 34 and Quin & Axtens Ltd [1909] 1 Ch 311.

⁶¹ The Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89.

⁶² Hoyt v Thompson's Executors (1859) 19 NY 207 at 216Google Scholar, ruling that the directors’ powers are ‘original and undelegated’.

⁶³ Charlestown Boot & Shoe Co v Dunsmore (1880) 60 NH 85Google Scholar; Manice v Powell (1911) 201 NY 194 at 200–201Google Scholar.

⁶⁴ Hurst, JW The Legitimacy of the Business Corporation in the Law of the United States, 1780–1970 (Charlottesville: University of Virginia Press, 1970) pp 79–80Google Scholar.

⁶⁵ Hutton v West Cork Railway Co (1883) 23 Ch D 654Google Scholar, per Bowen LJ in the Court of Appeal. See also Parke v Daily News [1962] Ch 927. Both these cases concerned the payment of gratuities to directors or employees after the company had ceased to be a going concern.

⁶⁶ See eg Parkinson, J Corporate Power and Responsibility (Oxford: Oxford University Press, 1993) p 77Google Scholar.

⁶⁷ The directors had very broad discretion to make expenditures aimed at conducting ‘the business to the most advantage’ where the company was a going concern: see Hampson v Price's Patent Candle Co (1876) 45 LJ Ch 437Google Scholar. In Evans v Brunner, Mond & Co [1921] Ch 359, this extended to funding scientific education in universities, considered by the directors to be essential for the business which ‘depended increasingly upon the advance of pure science. The company's greatest difficulty was to find men sufficiently equipped by their previous studies to undertake research work’. The limits of the principle were only reached in Tomkinson v South-Eastern Railway Company (1887) 35 Ch D 675Google Scholar, where the court ruled ultra vires a spending decision, rejecting as ‘extravagant’ the argument that ‘any expenditure which may indirectly conduce to the benefit of the company is intra vires’.

⁶⁸ See for example M Moore ‘Shareholder primacy, labour and the historic ambivalence of UK company law’ (2016) University of Cambridge Legal Studies Research Paper Series No 40/2016; Mukwiri, J ‘Myth of shareholder primacy in English law’ (2013) 24(2) European Business Law Review 217Google Scholar.

⁶⁹ Moore, ibid, at 18.

⁷⁰ Maitland, FW ‘Moral personality and legal personality’ (1905) 6 Journal of the Society of Comparative Legislation 192Google Scholar; Laski, H ‘The basis of vicarious liability’ (1916) 26 Yale LJ 105 at 134CrossRefGoogle Scholar; Laski, H ‘The personality of associations’ (1916) 29 Harvard Law Review 404CrossRefGoogle Scholar. For discussion see Harris, R ‘The transplantation of the legal discourse on corporate personality theories: from German codification to British political pluralism and American big business’ (2006) 63 Wash & Lee L Rev 1421Google Scholar.

⁷¹ Keynes, above n 39.

⁷² Nichols, above n 38, pp 78–79; Ireland, P ‘The corporation and the new aristocracy of finance’ in Robé, J-P, Lyon-Caen, A and Vernac, S (eds) Multinationals and the Constitutionalization of the World Power System (Oxford: Routledge, 2016) p 80Google Scholar.

⁷³ See Palmer, FB Company Law: A Practical Handbook for Lawyers and Business Men (London: Stevens, 1902) p 151Google Scholar. In 1906, the London Stock Exchange required listed companies to have a director shareholding qualification in their articles. Whilst no minimum level was specified, in practice it was set at a level representing ‘a substantial proportion of an individual director's wealth’: Campbell, G and Turner, J ‘Substitutes for legal protection: corporate governance and dividends in Victorian Britain’ (2011) 64 Economic History Review 571 at 582–583CrossRefGoogle Scholar. Mandatory rules in this area were rejected by the Greene Committee (see Report of the Company Law Amendment Committee (Cmnd 2657, 1926) para 53).

⁷⁴ Cheffins (2008), above n 7, p 255.

⁷⁵ Ibid, p 295

⁷⁶ Nichols, above n 38, pp 53–54; Keynes, above n 39.

⁷⁷ For a rare example in which a managing director with a ten-year contract was ousted from his position by a holding company which had acquired all the shares in the company and altered the articles, allowing it to remove any director by notice, terminating his contract and giving him a right to damages, see Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701. For further discussion see McGaughey, above n 47, pp 83–84.

⁷⁸ Quail comments that ‘A sharp line was drawn between the directors (seen as partial owners representative of the owners as a whole) and managers (seen as employees). Firms were viewed as sets of operations carried out by employees but initiated and supervised by directors in a manner analogous to the separate roles of politicians and civil servants’: Quail, above n 37, at 7.

⁷⁹ Robb v Green [1895] 2 QB 315 at 317.

⁸⁰ Davies, PL and Freedland, M ‘The complexities of the employing enterprise’ in Langille, G Davidov abd B (eds) Boundaries and Frontiers of Labour Law (Oxford: Hart, 2006) p 278Google Scholar.

⁸¹ For example, Companies Act 1862, Table A, Art 68 allowed the directors to delegate to individual directors or committees, who would remain subject ‘to any regulations that may be imposed on them by the directors’, paving the way for a distinction in practice between executive and non-executive directors.

⁸² See for example Scrutton J in Nelson v James Nelson & Sons Ltd [1913] 2 KB 471 describing the power given to the directors to appoint a managing director as ‘a very ordinary one in articles’.

⁸³ Companies Act 1906, Table A, Art 72; Companies Act 1929, Table A, Art 68.

⁸⁴ Directors would only be liable for ‘gross’ negligence, essentially a lack of good faith: Lagunas Nitrate Company v Lagunas Syndicate [1899] 2 Ch 392 per Lindley LJ.

⁸⁵ In Craven-Ellis v Canons Ltd [1936] 2 KB 403 at 413–414, Greene LJ took the view that ‘A managing director is in a very different position to that of a mere manager since he is able to attend and vote at meetings of the board, and from the point of view of the company it was of importance that the person managing its affairs should be in a position to do this’.

⁸⁶ See for example Burton , above n 23, p 5, noting that sometimes the roles of managing director and manager were combined, and that it was essential for full reporting to the board to occur.

⁸⁷ In re Newspaper Proprietary Syndicate Ltd [1900] 2 Ch 349.

⁸⁸ Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701; Goodwin v Brewster (1951) 32 TC 80.

⁸⁹ Per Lord Reid in Harold Holdsworth & Co (Wakefield) Ltd v Caddies [1955] 1 All ER 725 at 738.

⁹⁰ (1908) 99 LT 524.

⁹¹ In re County Palatine Loan and Discount Company. Cartmell's Case (1874) LR 9 Ch App 691 per Sir G Mellish LJ.

⁹² Manning, B ‘The American stockholder’ (1958) 67 Yale Law Journal 1477 at 1490CrossRefGoogle Scholar.

⁹³ Report of the Committee on Company Law Amendment (Cm 6659, 1945) (Cohen Report).

⁹⁴ Cheffins (2008), above n 7, pp 344–345, noting that by 1969, retail investors no longer owned a majority of the shares of UK public companies. High tax rates encouraged individuals to sell their shares and invest in other, more tax-efficient assets, including pensions and life insurance: see ibid, pp 81–82 and 341–349.

⁹⁵ Bircher, P From the Companies Act of 1929 to the Companies Act of 1948: A Study of Change in the Law and Practice of Accounting (Oxford: Routledge, 1991) pp 80–90Google Scholar; Maltby, J ‘Was the Companies Act 1947 a response to a national crisis?’ (2000) 5 Accounting History 31 at 38 and 47CrossRefGoogle Scholar.

⁹⁶ Cohen Report, above n 93, p 7.

⁹⁷ Bircher, P ‘Company law reform and the Board of Trade, 1929–1943’ (1988) 18 Accounting and Business Research 107 at 116–117CrossRefGoogle Scholar. References to the community and public interests in the mandate were considerably ‘watered down’: B Clift ‘The labour movement and company law reform 1918–1945’ (1999) Sheffield Political Economy Research Centre Research Paper No 1 pp 34–37.

⁹⁸ The Cohen Report, above n 93, para 5, stated that its proposals for information disclosure would ‘ensure that as much information as is reasonably required shall be made available both to the shareholders and creditors of the companies concerned and to the general public’.

⁹⁹ Ibid, paras 96 and 103.

¹⁰⁰ Ibid, para 119. This recommendation was specifically targeted at protecting shareholders, who were lacking ‘information as to the financial position and results of the undertakings in which they are interested’.

¹⁰¹ Ibid, para 101. This was a particularly controversial topic, and much time was spent discussing it.

¹⁰² Ibid.

¹⁰³ It did propose giving the courts power to require, and making it easier for shareholders to demand, a Board of Trade investigation into the management of the company where this was ‘in the public interest’: Cohen Report, above n 93, para 156. However, there was no proposal to allow any group other than the shareholders to demand an investigation, and discussions about the introduction of public shareholders (see for example Minutes of Evidence, above n 43, Appendix M at 169) or company commissioners (see for example ibid, para 8134) during the hearings made no impact on the final report.

¹⁰⁴ Minutes of Evidence, above n 43, para 7038.

¹⁰⁵ Ibid, para 9479.

¹⁰⁶ See for example Mr Wilmot's description of shareholders as ‘proprietors of the business’ (ibid, para 1743) and his reference to the ‘original conception of control of the company by its proprietors’ (ibid, para 3682).

¹⁰⁷ Clift, above n 97, p 44.

¹⁰⁸ See Memorandum by the General Federation of Trade Unions Minutes of Evidence, above n 43, Appendix SS, and, for example, ibid, para 11274.

¹⁰⁹ Company Law Amendment, Draft Questionnaire for Discussion, Cohen Committee Archive, CL3, BT 146/5.

¹¹⁰ Cohen Report, above n 93, para 5, emphasis added.

¹¹¹ Ibid, para 7. The Committee's figures showed that, in a sample of large companies, 87.7% of the shareholders owned less than 300 shares (ibid, para 124).

¹¹² Ibid, para 124.

¹¹³ Ibid, para 130.

¹¹⁴ Ibid, para 125.

¹¹⁵ Ibid, para 126, implemented by CA 1948, s 133.

¹¹⁶ Ibid, paras 132–134, implemented by CA 1948, s 136.

¹¹⁷ Under Companies Act 1929, s 114, shareholders owning not less than one tenth of paid up capital carrying the right to vote were allowed to requisition an extraordinary general meeting, and the requisition had to state objects of meeting. Directors had to comply within 21 days, failing which the requisitionists could convene it themselves, with the company repaying their costs. This allowed shareholders to propose resolutions, including special resolutions. However, the Committee concluded that this power had become ‘largely illusory because with the great increase in the number of shareholders it has become difficult for any single shareholder, or even for a group of shareholders, to seek the support of their fellow members’: see Cohen Report, above n 93, para 128.

¹¹⁸ Cohen Report, above n 93, para 128, implemented by CA 1948, s 140 with slight changes to the time periods.

¹¹⁹ Ibid, para 130.

¹²⁰ See Minutes of Evidence, above n 43, Appendix X at 350.

¹²¹ Ibid, para 6038.

¹²² Cohen Committee Archive, CL 11A BT 146/5 (submission of by Stephen Gordon of Lawrence, Messer and Co).

¹²³ Unfortunately, the minutes of the first 13 meetings of the Committee, BT 146/3 are missing from the National Archives.

¹²⁴ Cohen Committee Archive, CL 72, BT 146/5.

¹²⁵ Ibid, CL 102.

¹²⁶ Ibid, CL 142 (memorandum circulated for consideration at meetings to be held on Tuesday 1 August and Wednesday 2 August, dated 14 July 1944, para 11(6)).

¹²⁷ Ibid, BT 146/4 (minutes of thirty-second meeting, 6 September 1944).

¹²⁸ Ibid, minutes of thirty-third meeting, 19 September 1944, para 1.

¹²⁹ Ibid, CL187C [B], BT 146/11.

¹³⁰ Minutes of Evidence, above n 43, para 10190 (Evidence of Samuel Cash, partner in Vizards).

¹³¹ Hannah notes that this could amount to as much as one tenth of the purchase price: Hannah, L ‘Takeover bids in Britain before 1950: an exercise in business “pre-history”’ (1974) 16 Business History 65 at 72CrossRefGoogle Scholar.

¹³² Cohen Report, above n 93, para 92.

¹³³ Ibid. Ultimately CA 1948, s 193 introduced a rule requiring directors to disclose to, and obtain approval from, the general meeting for any payment made to them ‘by way of compensation for loss of office, or as consideration for or in connection with his retirement from office’. Failure to comply would result in the director holding the payment on trust for shareholders who sold their shares.

¹³⁴ See for example the observation of Professor Goodhart that ‘it is possible… for directors to continue in office longer than may be desirable’ (Minutes of Evidence, above n 43, paras 5257 and 9481). Cohen pointed out that removal of life directors would require at the very least an extraordinary resolution (ibid, para 5148). See also the representations from the London Stock Exchange (ibid, para 6185 and Cohen Committee Archive, CL108A, BT 146/5).

¹³⁵ Minutes of Evidence, above n 43, para 10194.

¹³⁶ As Horace Samuel, who gave evidence to the Committee but did not discuss removal of directors, put it in his 1933 book, ‘Directorates thus tend to constitute the vested interest of a group, and being a vested interest, are almost as difficult to dislodge as the pocket-boroughs of the eighteenth century’: Samuel, H Shareholders’ Money (London: Pitman, 1933) p 120Google Scholar.

¹³⁷ Hansard HC Deb, vol 438, cols 585–586, 6 June 1947.

¹³⁸ Ibid, col 588.

¹³⁹ Ibid, col 642 (Eric Fletcher, MP).

¹⁴⁰ Hansard HL Deb, vol 146, col 969, 1 April 1947 (Viscount Maugham).

¹⁴¹ Hansard HC Deb, vol 438, col 619, 6 June 1947 (Sir Hugh Lucas-Tooth, MP).

¹⁴² Hansard HL Deb, vol 145, col 862, 24 February 1947.

¹⁴³ Ibid, col 872.

¹⁴⁴ Ibid, col 863.

¹⁴⁵ Ibid, col 865.

¹⁴⁶ Hansard HL Deb, vol 146, cols 727–728, 25 March 1947; HC Deb, vol 441, cols 194–195, 28 July 1947; HL Deb, vol 151, cols 955–975, 5 August 1947.

¹⁴⁷ Maltby, above n 95, at 47 and 54.

¹⁴⁸ As Bruner puts it, ‘stronger social welfare protection… permitted the UK corporate governance system to focus more intently on shareholders without precipitating social backlash’: Bruner, C Corporate Governance in the Common Law World (Cambridge: Cambridge University Press, 2013) p 143CrossRefGoogle Scholar. For detailed discussion of the Labour Party's evolving approach to takeovers and mergers during the 1960s and 1970s, see ibid pp 151–160. It was only during the 1980s, with the rolling back of many of those reforms, as well as the weakening of trade unions, that those social consequences became clearer. We are grateful to an anonymous referee for suggesting this point.

¹⁴⁹ Kahn-Freund, O ‘Company law reform: a review of the Report of The Committee on Company Law Amendment’ (1946) 9 Modern Law Review 235 at 245CrossRefGoogle Scholar.

¹⁵⁰ Dodd, EM ‘Review: report of the committee on company law amendment’ (1945) 58 Harvard Law Review 1258CrossRefGoogle Scholar.

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¹⁵² Gower, LCB ‘Some contrasts between British and American corporation law’ (1956) 69 Harvard Law Review 1369 at 1381, 1389–1390 and 1396CrossRefGoogle Scholar. However, he did not explicitly link the emergence of takeovers to CA 1948, s 184. As Bruner, above n 148, p 148 notes, Cohen himself, in a 1957 lecture, appears to have recognised that his committee's reforms ‘contributed to the rise of hostile takeovers’, although he did not explicitly refer to the contribution of the removal power.

¹⁵³ Gower, above n 36, at 1185–1186.

¹⁵⁴ However, this approach to management appears to have persisted among those managers in a Northern City interviewed by Nichols in 1961–1962: see Nichols, above n 38, ch 17.

¹⁵⁵ This was the Bank of England's working definition of a takeover from 1959, included in ‘Take-over bids, note of meeting at Bank of England on Friday 10 July 1959’, cited in Roberts, R ‘Regulatory responses to the market for corporate control in Britain in the 1950s’ (1992) 34 Business History 183 at 184CrossRefGoogle Scholar.

¹⁵⁶ Charles Clore launched the first hostile takeover bids in 1953 for the Savoy Hotel and Sears: see Chambers, D ‘The city and the corporate economy since 1970’ in Floud, R, Humphries, J and Johnson, P (eds) The Cambridge Economic History of Modern Britain vol 2 (Cambridge: Cambridge University Press, 2014) p 267Google Scholar.

¹⁵⁷ Hannah, above n 131, at 67.

¹⁵⁸ See JB Tabb Accountancy Aspects of the Takeover Bids in Britain 1945–1965 (unpublished PhD Thesis, University of Sheffield, 1968) p 10; Hannah, above n 131, at 71.

¹⁵⁹ See Tabb, above n 158, p 11. In 1906, Lever exceptionally launched hostile bids for a number of his competitors who had refused to form a cartel with him, and another hostile bid was launched by John Knight Ltd in 1920.

¹⁶⁰ In Guinnane et al's 1892 sample only one company required all directors to stand for re-election at each annual meeting: see Guinnane et al, above n 46, p 243.

¹⁶¹ Franks et al, above n 55.

¹⁶² Cohen Report, above n 93, para 92.

¹⁶³ See eg Companies Act 1929, Table A, Art 77; Companies Act 1906, Table A, Art 83; Companies Act 1862, Table A, Art 63.

¹⁶⁴ Guinnane et al, above n 46, p 244. Similarly, many companies provided that anyone seeking the office of director, except retiring directors or those chosen by the board, had to provide advance notice, potentially giving the directors ‘time to line up the votes to block anyone whom they did not favour from securing a seat on the board’: see ibid.

¹⁶⁵ Clauses in the articles requiring consent of managing directors to particular decisions were enforced at the instance of a shareholder-director in Quin & Axtens Ltd v Salmon [1909] AC 442. This effectively limited the powers of the board, because as Lord Loreburn put it, ‘the directors cannot manage it in a particular way – that is to say, they cannot do certain things if Mr Salmon or Mr Axtens objects’ (ibid, at 443).

¹⁶⁶ Guinnane et al, above n 46, p 244.

¹⁶⁷ In the Court of Appeal decision in Quin & Axtens, Farwell LJ considered the provision in the articles to be ‘a most usual and proper requirement, because a business does require a head to look after it, and a head that shall not be interfered with unnecessarily’. The effect was that ‘to oust the directors, a special resolution would be required’: see [1909] 1 Ch 311 at 319.

¹⁶⁸ For discussion see Bruner, above n 148, pp 39–40 and 208–209.

¹⁶⁹ Hannah, above n 8.

¹⁷⁰ CA 1929, ss 95 and 98 required companies to maintain and make public a register of members. However, s 101 provided that trusts of shares did not have to be entered on the register, making it difficult to identify beneficial ownership. The Cohen Committee made proposals to require nominee shareholdings to be indicated and beneficial interests of more than 1% to be disclosed (above n 93, paras 78–81), but these recommendations did not become law.

¹⁷¹ As in the bids by Daily Mirror for Amalgamated Press in 1958 and Viyella International for Jersey Kapwood in 1966: see Tabb, above n 158, p 191.

¹⁷² Ibid, at 188, identifying at least 13 partial bids between 1948 and 1965. For example, in its bid for Drake & Mount, Longman only offered to buy the first 10,000 shares tendered. There was no regulation of partial bids until the introduction of the City Code in 1968.

¹⁷³ As in the bid of Westminster Bank for Diners’ Club Ltd in 1965: see ibid at 189.

¹⁷⁴ As in the 1961 bid by City Centre Properties Ltd for Manchester Royal Exchange: see ibid at 192. The Revised Notes of 1963 required the bidder to disclose the level of acceptances, but this rule was subsequently broken by British Oxygen which declared its bid for Murex unconditional but delayed disclosure of the level of acceptances by six hours: ibid at 262.

¹⁷⁵ Bull and Vice show how, provided they acted in good faith, a majority shareholder could then use their control to withdraw surplus cash from the company by selling assets to it: Bull, G and Vice, A Bid for Power (London, Elek, 3rd edn, 1961) p 227Google Scholar. The shareholder's ‘sell out’ right was not introduced until 1986.

¹⁷⁶ See for example the bid by Broadmead for Murdoch & Co in 1957 or the 1958 bid by Reynolds for British Aluminium, in which Reynolds warned shareholders publicly that it was close to gaining control, and that once it had control of the company, it would instate a ‘prudent’ dividend policy: Tabb, above n 158, p 60.

¹⁷⁷ In 1963, Courtaulds took control of Bairns-Wear Ltd and cut the dividend from 10% to 5%: see ibid at 246.

¹⁷⁸ From a sample of 45 takeovers between 1947 and 1960 (which did not distinguish between voluntary and involuntary takeovers), Singh found that ‘around half’ of the directors of the acquired company were dismissed within two years of the takeover, but that ‘the incidence of dismissal seems on the whole to have little relationship either to the size or the profitability of the acquired firm’: Singh, A Takeovers: Their Relevance to the Stock Market and the Theory of the Firm (Cambridge: Cambridge University Press, 1971) p 149Google Scholar. These figures form a marked contrast to the findings of Franks et al, above n 55, in relation to takeovers between 1919 and 1939. We are unaware of any quantitative study of director removal during the UK 1960s takeover wave, but indirect support for the development of a new threat to the position of directors and management can be found in the growth of structural defensive measures between 1950 and 1965, a dynamic which came to an end as institutional investors mounted opposition to this (ibid p 603, Table 10.8), as well as the post-bid defensive measures in companies such as the Savoy Hotel, and those which came before the courts in Hogg v Cramphorn Ltd [1967] Ch 254. By the 1980s, board removal appears to have been routine following a hostile takeover: in a study of hostile takeovers in the UK from 1985–1986, Franks and Mayer found that 90% of directors were replaced within two years of the bid, whilst for accepted bids the figure was 50%: Franks, J and Mayer, C ‘Hostile takeovers and the correction of managerial failure’ (1996) 40 Journal of Financial Economics 163 at 167–168CrossRefGoogle Scholar.

¹⁷⁹ This appears to have happened for the first time in the takeover by Fraser of Binns in 1953. The directors held 29% of the shares, preventing Fraser from using the squeeze out rules (CA 1948, s 209 required the bidder to have acquired 90% of the shares), but they capitulated once Fraser acquired a majority of the shares, and sold their shares to him at the lower price of his first bid: see Bull and Vice, above n 175, pp 109–110.

¹⁸⁰ The directors of the Savoy Hotel Ltd appear to have been the first to have tried this: see Bull and Vice, above n 175, pp 29–46.

¹⁸¹ For discussion of the scope of defensive measures under common law and under the City Code see Johnston, A ‘Takeover regulation: historical and theoretical perspectives on the City Code’ (2007) 66 Cambridge Law Journal 422CrossRefGoogle Scholar. One further possibility was to give the directors weighted voting rights on a resolution to remove them, as permitted by the case of Bushell v Faith [1970] 1 All ER 53. However, there is no evidence that this mechanism was used in the UK as a pre-emptive defence against hostile takeovers. If adopted on incorporation, this would reflect the agreement between the founders (and indeed such clauses are widely understood as a means of protecting agreements within quasi-partnership companies), but it would be difficult to introduce such a clause after listing, as this would require a special resolution to alter the articles, and institutional shareholders would be strongly opposed to a measure that would entrench board members. This hostility can be seen from their opposition to the use of non-voting shares, which were used for a brief period as a defensive measure during the 1950s and 1960s, but were gradually eliminated by strong opposition from institutional investors and disapproval from the stock exchange: Franks et al, above n 55, p 604. This hostility presumably explains why multiple voting rights are legally permissible but rarely seen in practice in UK listed companies: see Armour, J et al. ‘Law and financial development: what we are learning from time-series evidence’ (2009) 6 BYU L Review 1435 at 1459 fn 87Google Scholar, noting that there was ‘no legal or regulatory prohibition of multiple voting rights’ between 1970 and 2005.

¹⁸² In 1960, British Drug Houses responded to a bid by doubling its dividend, whilst in 1962, Waterlow & Sons Ltd responded by selling off its head office and distributing the proceeds to shareholders: see Tabb, above n 158, pp 61–62.

¹⁸³ The first example of this appears to be the contested takeover in 1955 of Millspaugh by Hadfields. The rival bidder was defeated once Hadfields obtained a majority of the shares. See Bull and Vice, above n 175, pp 166–183.

¹⁸⁴ Report of the Company Law Committee (Cmnd 1749, June 1962), Note of Dissent, paras 6 and 9 (Jenkins Committee).

¹⁸⁵ Hannah, above n 131, at 69–71 and 75.

¹⁸⁶ Ibid, at 70–71.

¹⁸⁷ Bull and Vice, above n 175, pp 16–18. For details of marginal tax rates of top rate taxpayers during this period, see Cheffins (2008), above n 7, p 342.

¹⁸⁸ The Wilson Report concluded that the extent of direct contact between institutions and companies ‘varies greatly’: see Committee to Review the Functioning of Financial Institutions (Cmnd 7937, 1980), para 900. In 1989, in a Bank of England discussion paper, Charkham concluded that while dialogue did occur ‘on occasion’, most shareholders had ‘all but abdicated’ their responsibilities under the system of ‘shareholder supremacy’: J Charkham ‘Corporate governance and the market for companies: aspects of the shareholders’ role’ Bank of England Discussion Paper No 44, November 1989, 4.

¹⁸⁹ We are grateful to John Quail for suggesting this point. Franks et al, above n 55, p 586, highlight the importance of ‘the growing influence of institutional investors… in establishing the United Kingdom's unusually active market in corporate control’.

¹⁹⁰ Hannah, above n 131, at 5 fn 69.

¹⁹¹ Jenkins Committee, Note of Dissent, above n 184, paras 4 and 7.

¹⁹² Cheffins (2008), above n 7, pp 76 and 363. At p 332, Cheffins notes that the new right of the majority to dismiss directors before the end of their term was stricter than the stock exchange requirements.

¹⁹³ Bruner, above n 148, p 147.

¹⁹⁴ Moore, above n 3, p 212.

¹⁹⁵ In 1954, The Economist argued that if companies have financed themselves through retained earnings, but those ‘resources are successfully employed to yield their best economic return, the companies never will be will be, or need not be, “victims” at all, for the bidder will defeated. But if the assets are not yielding a proper return, then even the bidder who “merely” wishes to take possession of them will generally be performing an economic service to the community’: The Economist, 23 January 1954, p 254. In 1961, Bull and Vice approved of the argument that ‘the bidder makes the most efficient use of a company's assets’, whilst ‘many boards in the past have tended to adopt excessively long-term schedules’: Bull and Vice, above n 175, pp 25–26.

¹⁹⁶ In 1953, the Bank of England had expressed opposition to the emerging hostile takeover, but by 1958 had given its approval: see Roberts, above n 155, at 187 and 191.

¹⁹⁷ Jenkins Committee, above n 184, para 265.

¹⁹⁸ Ibid, Note of Dissent, para 9: ‘Efficient directors who have treated their shareholders fairly and frankly should have little to fear from a raider’ and should not be allowed to protect themselves against this ‘remote risk’ by issuing non-voting shares and ‘converting themselves into a self-perpetuating oligarchy’.

¹⁹⁹ Marris, R ‘A model of the “managerial” enterprise’ (1963) 77 Quarterly Journal of Economics 185 at 190CrossRefGoogle Scholar.

²⁰⁰ Manne, HG ‘Mergers and the market for corporate control’ (1965) 73 Journal of Political Economy 110CrossRefGoogle Scholar.

²⁰¹ Johnston, above n 181.

²⁰² Segrestin, B and Hatchuel, A Refonder l'entreprise (Paris: Le Seuil, 2012)Google Scholar.

²⁰³ Ireland, P ‘Defending the rentier: corporate theory and reprivatization of the public company’ in Gamble, A, Kelly, G and Parkinson, J (eds) The Political Economy of the Company (Oxford: Hart, 2001) pp 144–145Google Scholar.

²⁰⁴ Johnson, L ‘New approaches to corporate law’ (1993) 50 Wash & Lee L Rev 1713 at 1715Google Scholar.