Analysis On Validity Of Anti-Takeover Measures By Target Company

The constant reform of the corporation system and the sustainable development of the market economy bring great opportunity to Merger and Acquisition market of China, which cause the competition of the control rights between the companies increasingly intense. To deal with the Merger and Acquisition effectively, many companies adopt all kinds of measures to beat back the Purchaser by setting up anti-takeover rules in the articles of association of the target company previously the purchase or take other anti-takeover measures in case of the hostile takeover. The aforementioned anti-takeover measures come into effective mainly through setting up all kinds of obstacles to postpone the purchaser enters into the board of director or devalue the assets of the target company so as to increase the acquisition cost of the purchaser and make the acquisition much harder.However, because of the immature of acquisition experiences and lacking of relevant regulations of our country, there are many listed companies adopt ill-formed measures even the rules breaking laws and regulations. The paper brings out some basic rules including the principal of protection shareholders, principal of business judgment, and principal of public interest and analysis the current measures provides by the listed companies by making use of the aforementioned principals to proof the legitimacy of the anti-takeover measures adopted by the listed companies and brings helpful suggestions to the current legislation system. The whole paper divides into five parts.The first part is introduction which mainly introduces the background and significance of the anti-takeover. The revision of the security law of PRC and establishment of subsequent regulations clear the way for development of acquisition market from the point of system which is of great meaning for undertaking of the acquisition normatively and development of the market soundly.The second part mainly discusses the positive effect and negative influence with the concern standards of legitimacy. The paper proposes dominating concern standards for anti-takeover measures by target companies including the principals of shareholder protection, business judgment, auction obligation of directors and public interest. The aforementioned principals provide basic standards for the evaluation of legitimacy of the anti-takeover measures and laid solid foundation for the whole paper.The third part mainly introduces the precautionary anti-takeover measures including inputting the rules of limitation nomination directors by shareholders, Staggered Board Election and Poison Pill and analysis the aforementioned measures using the principals maintained in the second part.The fourth part mainly introduces the adversarial anti-takeover measures including disposal of assets, share buyback and pull-in friendly acquisition and analysis the aforementioned measures using the principals maintained in the second part.The fifth part mainly proposes legislation suggestions bases on the aforementioned analysis of legitimacy of anti-takeover measures and problems occur in the acquisition market of China and indicates suggestions including information disclosure system and dispute settlement system to make contribution to the development of acquisition market of China.