Models Of And Regulations On Corporate Merger And Acquisition--Focuses On M&A Practices In China

This paper studies the models of and regulations on corporate merger and acquisition in China. The factual and legal background of this paper is the situation that on one hand, corporate merger and acquisition activities have sprung up in operations in the capital market while on the other hand, the present regulation system of merger and acquisitions in China is far from satisfactory.The research method of this paper is mainly a combination of regulations review and cases study. During the process of analysis and discussion of the detailed contents, this paper, based on the practical cases, investigates the regulation system of merger and acquisition in China both in the system aspect and the detailed provisions. Different opinions are given with respect to some detailed provisions. With respect to the models of corporate merger and acquisition, there are all together four models which can be described as assets (stock) purchase model, trust model, stock takeover model and proxy contest model .This classification is made according to the different characters in the relations between the acquirer and the target company as well as the investors of the company through an analysis of the legal characteristics of different kinds of methods used in the M&A practices. Since different models are of different legal characteristics, the legal issues arised in the practice are also of different kind. With respect to the regulations on corporate merger and acquisition, the system is composed of two aspects, namely the internal system and external system, as a result of the common and difference of the four models. In the internal regulation system, different provisions shall be promulgated respectively to the four models. And within the external system, there are issues like the decision process of the merger and acquisition, the dealing with the creditors of the target company, the arrangement of the employers of the target company and the taxes collected on the M&A. The legal provisions of these issues present a balanced system of all the interested parties. All these provision and the taxes policy represents the attitude and the aim of the regulations on merger and acquisition. The paper is composed of four chapters with a total number of about 35,000 words. And it is structured as the followings. The Introduction part firstly gives an overview of the present situations of the merger and acquisition activities in China and a criticism of the regulation system which is composed of regulations, notices promulgated by different levels of administrative organs and the lack of harmony among all these provisions. Then it discusses the aim and the value of the regulations on merger and acquisition. Chapter I begins with the related concept used both in the foreign regulatory system and the present regulatory system in China. Particular attention is paid to the three main concepts, namely merger, takeover and "Jianbin", especially the relations and comparison between merger and other M&A means, the reasonableness of the concept of "negotiated takeover" in the Chinese Securities Law and the clarities of the concept of "Jianbin". And then all the practical M&A means are classifies to four models according to the legal characteristics. And the legal issues arised in the operations are discussed in the following Chapter II, which consists of three parts: assets (stock) purchase model, trust model, and proxy contest model. Chapter III highlights the thinking way that shall be followed while we try to regulate the corporate merger and acquisition. Chapter IV gives a detailed discussion of all the four aspects included in the external system of regulation. And then comes a short conclusion of the whole paper.