Abstract
In CTS Corp. versus Dynamics Corp. of America, et al., the US Supreme Court upheld Indiana's Control Share Acquisitions Chapter (Indiana Act), which places restrictions on takeovers so as to defend the rights of shareholders. Under the Indiana Act, disinterested shareholders are required to vote on the transfer of voting rights to an acquiror whose shares surpass certain threshold proportions. However, the Indiana Act tips the balance too much in favor of deterrence. A better approach to safeguarding shareholders is to ensure that they have adequate time to seek and assess alternative bids. Policymakers should resist the temptation to discourage certain classes of bidders from engaging in takeover attempts. However, greenmail, the selective repurchase of shares at a premium from a prospective acquiror so as to prevent a takeover, should be discouraged. In the case of greenmail, other shareholders will suffer a decrease, rather than an increase, in value.