The Legal Regulation Of Listed Companies' Control

The Legal Regulation of Listed Companies'ControlObserving corporate governance practices and rule changes worldwide, it hasalways been a consensus of the majority of countries to regulate corporate control inaccordance with laws as a core issue. Accompanied by the rapid development ofChina's capital market, there are a large number of corporate control's illegal run andinterest-damaged minority shareholders in listed companies which increase fast in thenumber. It constitutes the topic's practical significance and theoretical value to addresspractical problems urgently and make rules scattered-inefficient and expect theoreticalstudy diverse. However, it is hardly possible task to use any foolproof strategy inkeeping control of listed companies operated in accordance with laws forever. In orderto consolidate micro-foundation of capital market, enhance listed companies'capital-credit capability, lead more social-free capital to participate in optimalallocation of resources, and then promote healthy development of the country'seconomy, it is clearly necessary and feasible to classify and integrate the regulatedstrategies of listed companies'control after the comparison of different countries'rules.In this regard, the article attempts to restore and show the dynamic complete picture ofthe legal regulation of listed companies'control by observing systematically separatewith each other but interrelated three running aspects——competition, trade, exerciseof listed companies'control. And such a system of rules will also continue to beoptimized and improved depending on the development of securities markets. Minorityshareholders as the owner of the listed companies is the subject whose rights andinterests are damaged most commonly and most seriously in the corporate governancemodel of different ownership, and at the same time they also have the strongestsubjective aspirations of effective legal protection. Based on the above-mentioned, thearticle reinterpretates the strategies which regulate control of listed companies, getsrelationship of different strategies to interact coordinatively, finally achieves balance ofindividual interests in corporate field and reshaped individual standard in corporate law.In addition to the introduction and conclusion, the article is divided into fourchapters, the basic contents are as follows:Chapter 1 is"Basic principles of legal regulation of listed companies'control". Itsystematically discusses the ontological theory of corporate control, the pros and cons,the regulatory framework of listed companies'control (run). From the structuralarrangements of full text, this chapter is the logical premise that the later chapters cancommence. Specifically, the chapter first analyzes corporate control from the legaldefinition, legal nature and legal status with the conclusion that corporate control in thenarrow sense refers to the ultimate exclusive influence which dominates corporateresources, decides company whether to exist, belongs to diverse subjects, runspractically, performs in different patterns. In essence it embodies one kind of privateright with power color, and possesses simultaneously the legal property of contractualright and proxy right. And, as a new right form, corporate control has many criss-crosscorrelation with ownership, equity and operate right so that they may coincide to eachother while they may be far away from each other with the relevant parameters alreadychanged. And then the chapter analyzes the possible pros and cons, that is, value factorincluded and real risk caused during the run of listed companies'control. Typically, theformer includes: consolidating the base of democracy, reshaping decentralizationmechanism; regulating the transfer of corporate right, optimizing corporate governance;exercising corporate right legitimately, contributing to capital-credit effect. Contrary tothe former, the latter is expressed as: any other rights can't equal to corporate controlwhich is dominant in company governance itself; corporate control is transferredinefficiently just for profits; the wanton abuse of corporate control tends to betreachery. Finally the chapter establishes regulatory framework of listed companies'control with minority shareholders protection as target, standardized running asregulatory principle, running structure as regulatory system.Chapter 2 is"Legal regulation of competing for listed companies'control". Thischapter first analyzes basic questions in competing for corporate control, and thenfocuses on proxy solicitation as mechanism in competing for listed companies'control. As far as competing for corporate control is concerned, its essence lies in competingfor shareholders'voting rights; its limit is voting rights exercise mechanism establishedby legislative process of one country, with relative stability, forced to accept byshareholders; its mechanisms include proxy voting rights, Voting Trust and votingrights with binding agreement. However, only proxy solicitation is usually applied tocompete for listed companies'control as mechanism. In practice the majority of proxysolicitation behaviors are based on the election of directors, that is, the company'spower management or the company's shareholder group without power collectsattorney of voting rights as much as possible for the purpose of keeping or competingfor corporate control. Therefore, the proxy solicitation is also known as competing forcorporate control. Its existence, is not only good at expanding company's democracy,but also helps to optimize corporate governance. Legislatively, the rules about scope ofthe collecting subject, definition of the collecting behavior and obligation of thecollecting subject constitute the basic system structure of proxy solicitation. Thesystem in China developed in the spontaneous practice of relevant subjects in thesecurities market and operated inefficiently. The author believes that legislativeinefficiency leads to the result. Actually, SFC is supposed to develop specific rules inthe form of departmental rules for proxy solicitation which exists in operationalpractice field and needs regulations as specific-detailed as possible.Chapter 3 is"Legal regulation of listed companies'control trade". Issues exploredinclude theoretical interpretation, agency problems, regulation strategies of corporatecontrol trade, and the offerors'information disclosure obligation, the controllers'fiduciary duties of target company. Specifically, this paper is ready to use the term"corporate control trade"in a narrow sense, so corporate control trade is directlydefined for company acquisition. In fact, most scholars agree on this viewpoint. Theagency problems of corporate control trade are mainly divided into three categories,namely, the offerors force the minority shareholders in the inefficient judgment oftarget company to accept the low-priced offer; controlling shareholders of targetcompany unfairly squeeze the minority shareholders of target company just forself-serving purpose; controlling operators of target company represent the minority shareholders of target company as agent based on the self-serving motives; To addressthese agency problems, the law could resort to information disclosure strategy andfiduciary duties strategy. As for the offerors, they must obey"authenticity,completeness, timeliness"standard when disclosing information. At the same time,potential acquisitions, the tender offer acquisitions, the agreement acquisitions shouldstrictly abide by the relevant provisions of China Securities Act, the acquisitionmanagement approach of listed companies. As for the controllers'fiduciary duties oftarget company, it's an important part to identify the controllers of target companywhether to violate fiduciary duties in improving and refining our acquisition legislationof listed companies.Chapter 4 is"Legal regulation of listed companies'control exercise". Issuesexplored include situation review of control exercise, elements to determine andregulatory paths against control abuse, the regulation of control abuse in listedcompanies according to fiduciary duties path and shareholder litigation path. Longwords, control abuse in listed companies is ubiquitous in the world, the determiningelement consists of four parts, that is, actors, the purposes of conduct, behaviorperformances and behavioral consequences, and there are two regulatory paths, namely,fiduciary duties path and shareholder litigation path. As for the regulation of listedcompanies'control abuse under fiduciary duties path, this paper attempts to cut fromthe legitimacy of jurisprudence basis of the fiduciary duties, and explore the judicialpractice way of duty of loyalty and due diligence obligation on the basis of analyzingthe factor structure of fiduciary duties. As for the regulation of abuse of listedcompanies'control under shareholder litigation path, the paper first assesses thefunction of shareholder litigation, and then analyzes the entity basis of shareholderlitigation, finally views Chinese current legislation of shareholder litigation.