| Under the new normality of economic development,listed companies,as the significant participants in capital market,have become the backbone force for national economic development.Mergers and acquisitions of listed companies have turned into one of the important ways of marketization for resource allocation in capital market,the important approach for listed companies to integrate resources,make themselves bigger and stronger and drive the growth of corporate value,and also become the significant tool for the adjustment of national economic structure as well as the transformation in economic development pattern.President Xi Jinping mentioned in 2018 Boao Forum for Asia that Chinese gate for opening up will never be shut,instead it will be open wider and wider;At the end of 2017 and the beginning of 2018,HKEX carried out the pilots of Inclusive Circulation of Shares and Dual-class Share Structure respectively;In May 2018,A shares were included into MSCI Index,Shanghai-Hong Kong Stock Connect,Shanghai-London Stock Connect,CDR,etc.and moving forward constantly… All of these moves represent that capital market in China is becoming more open,internationalized and liberalized day by day,mirror that in the past 30 years the construction of capital market in China and the development of listed companies have promoted each other actively,reflect that the constant improvement of Chinese market mechanism and laws has raised new requirements on the improvement of market mechanism.In the course of economic transition and heating-up from quantity to quality in China,acquisition of listed companies is getting more and more active,which shows the control power of listed companies has become a kind of resource and the control power of the favorably-operated listed companies is more scarce.However,some short-term capitals raise share prices by tender offer and gain premium through short-term speculation.It disturbs the market pricing mechanisms,damages long-term corporate value and causes the prevailing of market speculation.Once the tender offer that aims to acquire control power of the target corporate succeeds,usually the buyer would shuffle the management,obtain trade secrets and even form industrial monopoly.Under this circumstance,both the controlling shareholders and the target company Directors have sufficient reasons of their own to resist market-oriented tender offer.Therefore,multiple listed companies set Anti-Takeover clauses one after another.In China,the existing laws for capital market cannot meet the practical needs for Anti-Takeover.On one hand,target companies are lacking explicit guidance for Anti-Takeover and difficult to resist hostile acquisitions that are likely to produce negative influence to companies in legitimate and efficient ways,in the face of increasing market-oriented acquisitions;On the other,for preventing new ownership of control power,target companies amend corporate constitutions recklessly to prevent acquisitions,which triggers the chaotic phenomena of Anti-Takeover.Whether to resist infringement of corporate properties by hostile buyers or to prevent power abuse by management or major shareholders,are both designed to protect whole efficiency of companies and safeguard the rights of medium and small shareholders.Therefore,to regularize Anti-Takeovers of target companies and guide them towards legitimate and compliant Anti-Takeovers is the theoretical and practical issue that must be settled in order to build internationalized opening financial market,promote legal construction of capital market and safeguard rights and interests of investors as well as relevant subjects.On this basis,this article makes research on protection on medium and small shareholders under Anti-Takeover of listed companies,including value orientation of Anti-Takeover,decision-making power ownership of Anti-Takeover,rights and obligations of relevant subjects in target companies and the potency of specific Anti-Takeover measures.Apart from Introduction and Epilogue,this article is composed of 5 chapters,with major contents as follows,Chapter 1 is The Value Orientation of Anti-Takeover of Listed Companies in China.It is unfolded majorly on the reason of Anti-Takeover.Conceptually speaking,AntiTakeover is not statutory but practical.Although in Chinese laws and regulations,there is no word Anti-Takeover,in practice the behavior of Anti-Takeover occurs with high frequency and the legal issues caused by it have raised considerable concerns.Acquisition of listed companies originated from Britain and America where capital market has been developed earlier.The early company acquisitions were carried out mainly through negotiation between buyers and the management or major shareholders in target companies,in which generally the issues of Anti-Takeover didn't exist.But the appearance of insider transactions,fraudulent transactions,etc.caused infringement to the benefits of numerous medium and small shareholders.In order to protect investors' rights and interests and to improve market fairness,justice and openness,tender offers turned up.Tender offers provided a market-oriented way of company acquisition for British and American markets where management rights are highly separated from ownership,and played a positive role in market resource allocation,shareholder earnings,market competition,supervision of management,etc.however,the buyers who had poorer qualifications or pursued short-term benefits caused threat to the benefits of companies and shareholders.Especially under the political election system of America,besides economic development factors,the ownership or control power of some large enterprises can affect votes in the region.Every state of America was faced with 2 kinds of inclinations in acquisition legislation: encourage acquisition or strictly control acquisition,and encourage legitimate Anti-Takeover at the same time.Out of regional benefits,every state of America basically all selected stricter ways of acquisition.Different from the acquisition policies that were formed spontaneously in Britain and America,in China the construction of capital market is a planned result.The acquisition policies of listed companies originated from the policies in Hong Kong China,which inherited the policies in Britain.Moreover,building capital market in its initial period played a great role in resource reorganization of state-owned enterprises,under the idea of which the acquisition policies of listed companies were essentially different from those in Britain and America.However,with the gradual improvement of marketization and freedom in Chinese capital market and the amendment of relevant supporting laws and regulations,the acquisition and Anti-Takeover of listed companies in China are becoming more active and diversified,and the discussion about whether or not Anti-Takeover should be allowed has appeared as well.Also,for or against Anti-Takeover,its positive and negative roles both exist objectively,the critical point lies in how to use it legitimately and compliantly to play its positive roles and stop its negative roles.By analysis on the interest conflict between relevant subjects in acquisition and Anti-Takeover,it is concluded that,for both theoretical analysis and practical needs,the value and starting point of Anti-Takeover in China is to protect benefits of companies and shareholders and to give consideration to stakeholders at the same time.The value orientation of Anti-Takeover in China is basically the same with the Anti-Takeover policies abroad,but the differences in the soil which produced the policies and the environmental status gave rise to the differences in other follow-up issues.Chapter 2 is Exploration on the Ownership of Decision-Making Power in AntiTakeover in China.On clarifying the value orientation of Anti-Takeover,the research of this chapter starts with who shall make Anti-Takeover in China.The significance of discussing this question lies in the face that in the process of Anti-Takeover,intense conflicts of interest exist among all subjects,the results of acquisition and AntiTakeover would directly concern the vital interests of corporate shareholders,Directors,etc.,and different decision-making models would influence the interest balance of the whole companies,so it need be clarified and regularized.At present,the pattern of AntiTakeover decision-making power ownership is mainly dominated by decision pattern through shareholders' meeting represented by Britain and that through DIRECTOR represented by America.City Rules of Britain makes strict stipulation on the position of Director in the course of acquisition,and it requires Director to be strictly neutral.While in America,Director has extremely large space in Anti-Takeover,but also receives strong restraint from fiduciary duty.The 2 patterns are the specific em Directoriments of Anti-Takeover decision-making power ownership under the centralism of shareholders' meeting and Director.In China,the corporate governance pattern belongs to the centralism of shareholders' meeting,but the questions related to Anti-Takeover decision-making power have yet to be settled.The prohibitive behaviors of Director in acquisition of listed companies are em Directoried in the 8th and 33 rd provisions of Administrative Measures on Acquisition of Listed Companies.Provision 8 stipulates that the decisions and adopted measures made against the acquisitions by the Director of acquired companies shall be beneficial to safeguard the benefits of the companies and the shareholders;No abusing powers to set unsuitable obstacles to acquisitions;No providing financial aids of any forms to buyers by use of corporate resources;No infringement of legal rights and interests of corporates and the shareholders.Provision 30 stipulates that after making indicative announcements and before completion of tender offers of buyers,except from carrying on normal business activities or implementing the resolutions which have already been made by shareholders' meetings,the Director of acquired companies are not allowed to cause significant impacts on corporate assets,debts,rights and interests or business performance by disposing of corporate properties,outbound investments,adjusting principal business of companies,guarantees,loans,etc.without approvals from shareholders' meetings.However,both the two stipulations can't conclude the Anti-Takeover decision-making power ownership in China.Although shareholders' meeting owns the highest decision-making power under Corporate Law,according to the related stipulations in Measures and the particularity of acquisition & Anti-Takeover,Director shall possess certain rights in Anti-Takeover,that's also to say in Anti-Takeover of listed companies of China,Director is neither totally neutral like in Britain,nor close to freedom like in America.As a matter of fact,these two patterns have both merits and demerits.No matter it is the acquisition committee in Britain or the fiduciary duty of Director in America or other legal precedents,that all aim to stimulate the positive effects under the patterns apiece.Under the current legal environment and acquisition practice,these two patterns are really not irreconcilable.On the one hand,in the context of separation of two rights,the professionalization of Director and management plays a key role in protecting shareholders' interests in company acquisition.Even if the separation degree of two rights is not high enough,the professional business capacity of Director has been attracting increasing attentions from all countries,and certain rights shall be given in Anti-Takeover;On the other,it's the basic truth that at present major shareholders universally exist in listed companies of China.Meanwhile,compared with the abundant precedents in America,China is still unequipped with the soil for practice.Therefore,under the centralism of shareholders' meeting for corporate governance in China,shareholders' meeting shall keep the highest decision-making power towards AntiTakeover.But some Anti-Takeover measures do not necessarily need resolving by shareholders' meeting,that is to say that Director shall be given with certain selfgovernance.Chapter 3 is Fiduciary Duty of Target Company DIRECTOR.Based on the existing legal framework of China,this chapter further clarifies how Director regularizes behaviors in Anti-Takeover.In tender offers,there is a certain particularity in fiduciary duty of target company Director.Tender offer is a transaction behavior between buyers and target company shareholders and target company Director has no rights to intervene.But the reason why all countries make regulations towards the behaviors of target company Director in acquisition policies of listed companies lies in the fact that acquisition of listed companies concerns control power of companies as well as stakeholders.As an agent of company and shareholders,Director is able to refuse hostile buyers by virtue of its higher competence,to prevent losses of the whole interests and long-term interests of a company.Both in the decision-making patterns through shareholders' meeting and Director,Director play a significant role in safeguarding the interests of company and shareholders in Anti-Takeover.However,due to the direct interest conflict between Director and buyers,Director often blindly refuses acquisition regardless of company and shareholders' interests.So,the fiduciary duty of target company Director is particularly important.This article adopts dichotomy that is more widely applied against fiduciary duty,namely duty of loyalty and duty of diligence.Duty of loyalty is reflected in that target company Director is not allowed to violate company and shareholders' interests in Anti-Takeover;Duty of diligence is reflected in trying out for favorable terms and conditions for acquisition and preventing risks from buyers.According to the pre-,while-and post-phase of tender offer,relevant obligations are designed in more details.Chapter 4 is Fiduciary Duty of Controlling Shareholders in A Target Company.Mainly specific to the general equity framework of listed companies in China,fiduciary duty is extended to controlling shareholders of target companies.No matter to whom the law allocates the decision-making power of Anti-Takeover,controlling shareholders always can make decisions against whether to make Anti-Takeover with voting power.But the fiduciary duty of controlling shareholders is different from that of Director.Firstly,Director fiduciary duty is targeting a company or all shareholders,while controlling shareholders,due to their roles as shareholders,assume fiduciary duty towards medium and small shareholders,which is reflected in loyalty duty;Secondly,In terms of duty of diligence,because of the logic of capital majority decision,controlling shareholders usually can raise their own will up to company will through shareholders' meeting,which can't reflect the consensus between shareholders and investors but influence the interests of company and other shareholders;Thirdly,there is difference between the fiduciary duty of controlling shareholders and Director,but controlling shareholders usually can control company Director with voting power.At this moment,controlling shareholders actually play a role of operators and should undertake the fiduciary duty equivalent to that of Director under this circumstance.According to the present decision-making pattern of Anti-Takeover in China,two kinds of probability analysis can be made towards the behaviors of controlling shareholders in target companies.On the one hand,Director adopts Anti-Takeover measures within extend of competence,and controlling shareholders,as ordinary shareholders,voluntarily choose whether or not to sell equities,as long as it doesn't violate the interests of companies or other shareholders.It is justified to purse their own interests;On the other hand,when Anti-Takeover measures need be resolved by shareholders' meeting,the interest conflict between controlling shareholders and buyers is intensified.Controlling shareholders should strictly follow fiduciary duty while exerting voting power.In addition,all the above situations happen with the entry of outside buyers.But in practice,acquisition made by controlling shareholders increasing stakes also exists,under which circumstance,fiduciary duty shall be imposed to controlling shareholders as well.Chapter 5 is Effect Space of Anti-Takeover Clauses.This chapter is unfolded mainly on the effect issue of Anti-Takeover clauses.Listed companies can add Shark Repellents to resist hostile acquisition in their constitutions and clauses,or adopt the act of defense which produces defensive effects actually without amending company constitutions.Companies need analyze the effect and legality of relevant clauses and measures before adding them into company constitutions.And the essence of this issue is actually the effect of constitution clauses and the boundary of company selfgovernance.Through discussion over the nature of constitutions,this article analyzes the issue of shareholder protection under the different comprehension of constitution essence,and believes that the theory of self-governance regulations can better reflect the legal environment and practical needs of China and limited freedom can better highlight the protection towards medium and small shareholders.Then it makes enumerative analysis on relevant Anti-Takeover measures and screens out feasible measures combining with the legal environment of China.After that,it makes summarized conclusion towards Anti-Takeover clauses and extracts general laws to provide feasible space for Anti-Takeover measures of China. |
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