Edgar v. MITE Corporation (1981)
- Docket
- 80-1188
- Decided
- 1981-01-01
Summary
Question: Is the Illinois Business Take-Over Act unconstitutional under the Supremacy and Commerce Clauses of the U.S. Constitution? Conclusion: Yes, with regard to the Commerce Clause. The Illinois Act imposes burdens on interstate commerce that are excessive in light of the local interests the Act purports to further. Among the ways a corporation can be covered by the Act is if 10% of the class of equity securities subject to the offer is owned by shareholders located in Illinois. Thus Illinois would have the power to determine whether a tender offer may proceed even if made for a corporation incorporated and having a principal place of business outside of Illinois, with up to 90% of the shareholders residing outside of Illinois. Illinois's asserted interest in protecting resident security holders is insufficient to outweigh the burdens Illinois would impose on interstate commerce. In addition, Illinois's asserted interest in regulating the internal affairs of a corporation incorporated under its laws not only fails to justify the Act's coverage of foreign corporations, but transfers of stock to a third party do not implicate the internal affairs of a corporation.