Supreme Court of Ohio Rules State’s Tender-Offer Laws Unconstitutional in Landmark Securities Ruling
COLUMBUS, Ohio — The Supreme Court of Ohio, in a 4-3 decision delivered on October 10, 2024, has declared Ohio's tender-offer regulations unconstitutional, striking down a 2022 state law that mandated additional disclosures and procedural hurdles for certain corporate takeover bids. The ruling, issued in the case of State v. Vanguard Group, centered on whether state-imposed requirements, including a 48-hour advance notice period and detailed financial reporting, violated the U.S. Constitution's Commerce Clause by placing an undue burden on interstate securities transactions.
Chief Justice Sharon L. Kennedy, writing for the majority, held that the law "directly conflicts with federal authority under the Securities Exchange Act by creating a patchwork of state-level barriers that impede the free flow of capital." The dissent, led by Justice Melody Stewart, argued the law was a legitimate exercise of state police power to protect Ohio investors and businesses from hostile takeovers. The decision effectively voids a 2023 lower court injunction and prevents enforcement of the statute.
Legal experts anticipate the ruling will reshape corporate governance practices nationwide, as similar laws in other states face constitutional scrutiny. The Ohio Attorney General’s office has indicated it will not seek a rehearing, citing the high court's finality on the matter.