A Number Of Mergers- & Acquisitions-related Legal Issues

Mergers and acquisitions between companies in China have received a high degree of attention, because mergers and acquisitions can rapidly expand the size of the firm, reorganize quality assets, and enhance the competitiveness of enterprises and economic benefits. Therefore, it has become an important strategy for companies that seek external expansion to acquire through a public tender offer or agreement with the private shareholders in order to control the holding company. Meanwhile, this will also meet the fundamental purpose of main players in market and enterprises in market economy to seek to maximize their own interests and optimize the efficiency of the allocation of resources. However, this impulsive inter-company mergers and acquisitions driven by the requirement for capital expansion will not just lead to strengthened ties between companies, but also trigger affiliated enterprises, resulting in a large number of affiliated transactions. Affiliated transaction is like a double-edged sword, the pros and cons, so is the M & A transaction. In the mean time of better saving transaction costs, reducing transaction expenses and improving transaction efficiency, it may also be used by controlling shareholder to damage the interests of other stakeholders through his holding strengths and some flaws in legal system design.Based on the above, this article are divided into four chapters, the first chapter is to introduce the framework of basic situation of mergers and acquisitions on the basis of affiliated transactions, and further explain the M&A transactions arising from such special trading transactions. This transaction mainly consists of three basic types: affiliated transactions in reverse acquisition, affiliated transactions in assets As mentioned above, the mergers-and acquisition-related affiliated transaction is a widespread phenomenon and is not necessarily all restricted or prohibited. In essence, the law should restrict or ban the non-standard transactions that related parties seek their own interests at the cost of damaging other stakeholders'interests. Therefore, we have to try to regulate its legal system, can not either absolutely prohibited, or let it drift. We have to minimize specific disadvantages and give better play to the positive role of M & A transactions. The second chapter describes relative national regulations and legislations on the transactions, followed by theoretical analysis from two aspects: fiduciary duty of controlling shareholder and corporate governance structure.One of the basic principles of modern company law, the principle of equity equality and our unique stock right split structure, leads to controlling shareholders having more say than small shareholders. If they seek their own interests through controlling board of directors or shareholders avenues, the interests of small shareholders will be damaged. As a result, the third chapter explains the importance of protecting the interests of the small shareholders in mergers and acquisitions transactions, from our equity structure and corporate governance structure imperfect perspective, identifies problems and proposes solutions such as strengthening information disclosure and urging controlling shareholders to fulfill his fiduciary duty and compensate breach of duty. In particular, MBO in mergers and acquisitions transactions appeared most likely to lead to the loss of state assets; therefore, Chapter Four mainly examines management buyouts, and identifies problems and seeks legislative measures such as reinforcing legislations and implement competitive market pricing principles.