Virginia's recently enacted antitakeover statute, the "Affiliated Transactions" provision of the Virginia Stock Corporation Act, raises serious constitutional and economic questions. Although the form of the statute appears to regulate the internal affairs of Virginia corporations, the substance and practical impact of the statute render it violative of both the commerce and supremacy clauses. Constitutional analysis of state antitakeover legislation necessitates consideration of the economic desirability of an unrestricted market for corporate control. The United States Supreme Court's most recent statement on the subject, in CTS Corp. v. Dynamics Corp. of America, decided on April 21, 1987, reflects a noteworthy retreat from the Court's position in Edgarv. MITE. The debate concerning the role of economic analysis in the constitutional scrutiny of state antitakeover legislation, as well as the question whether such legislation is truly consistent with shareholder interests, appears to be far from settled.
Stanley K. Joynes III & Steven J. Keeler,
Virginia's 'Affiliated Transactions' Statute: Indulging Form over Substance in Second Generation Takeover Legislation,
U. Rich. L. Rev.
Available at: http://scholarship.richmond.edu/lawreview/vol21/iss3/3