Takeover Regulation On Listed Companies In China

Takeover of listed company means to acquire the shares of a listed company for the purpose of obtaining the control of that company. Takeover regulation could be classified as securities regulation and anti-monopoly regulation. The purpose of this thesis is to make a comparative study on the takeover laws and rules concerning securities regulation in U.K., U.S.A and China, and evaluate the current Chinese regulation method, objective and detailed rules. Anti-monopoly regulation is not included.Takeover of listed company is an important way to allocate resources on securities market. The characteristics of Chinese securities market could be summarized as'emerging'and'transitional'. And these characteristics are the major reason for the difference between Chinese securities market and the western developed ones. Therefore, the method and objective of Chinese takeover regulation should be carefully chosen.As the major trait of Chinese transitional securities market, Share segmentation caused the market split of tradable and untradeable shares and had a severe influence on Chinese takeover regulation. Upon the fulfillment of share segmentation reform, the major difference between Chinese securities market and developed markets have been removed, but is there any other special factors influencing the choice of Chinese takeover regulation method?After a comparative study, I suggest that the objective of Chinese takeover regulation should include two parts, one is to encourage effective takeover, deter ineffective takeover, the other is to provide sufficient protection, and maintain the market confidence. Considering the importance to improve the external governance function of the market of corporate control, detailed regulating rules should be intentionally designed to disperse the shareholding structure of listed companies.After a detailed examination, I found that the current Chinese takeover laws and rules originated both from the law and rules of U.K. and U.S.A. But it seems that the law maker and rule designer still have some misunderstandings on the policy considerations under the transplanted rules.With a law and economic analysis, I found that the value of current Chinese mandatory bid system could not be fully displayed. And I believe it's because of the low level minority shareholder protection which enables the controlling shareholder to grasp high private benefits of control, and effective takeovers are deterred thereby. In the long run, obtaining the CSRC's dispensation approval will still be the major method to transfer the control of listed companies. The dispensation has a direct relationship with the interest distribution among the acquirer, controlling shareholder and the minority shareholder of the target company, so it's very important for CSRC to grant the dispensation fairly and openly, and its power should be reasonably restricted.As to the detailed regulating rules, I suggest to make improvements in five aspects. First, the regulator should completely abandon the substantial approval system, and take contemporary filing system; second, the content of the information disclosure should be further improved; third, the early warning system should be adjusted to classify the simplified disclosure and detailed disclosure with the criterion of controlling intent, and the restrictions on the institutional investors should be loosen; fourth, in order to fully display the value of mandatory bid system, securities regulation should be strengthened to restrict the capability of controlling shareholder to grasp private benefits of control; fifth, during the legislature and rule making procedure, the current consultation system should be improved.To summarize, I believe the rules of takeover regulations reflect certain policy considerations and value judgment, which could be different in different countries. Upon the transplanting of law, we have to make a profoundly study on the rule s imported in the one hand, and have to know exactly where we are in the other. The Chinese securities market is still not developed enough, and lack deep-rooted culture of corporate governance, Chinese takeover regulation reform needs to be placed in the wider context of reforming corporate governance as a whole.