A Study On The Legal System Of Hostile Takeover

The hostile takeover, which does not need the cooperation from the target company, is a mode of takeover relative to friendly takeover. As one of the most complicated and disputing themes of modern corporation law, it not only concerns momentous interest's transfer between stakeholders, at least between shareholders and managers from both companies, but also deals with the foundation of company administration, such as the rights and responsibilities between directorate and shareholders meeting, and director's responsibilities. When the first hostile takeover occurred in America in 1960s, argument from all over the world never stops, but we could hardly see any rule about it or anti-takeover in China, where the market economy develops with high speed. That means, it is necessary to compare with foreign legislations, combine them and our facts, then establish a feasible system of our own.The thesis consists of four parts except introduction and concluding remarks. In the first part, the thesis reveals the hostile takeover's developing background and value by jurisprudential analysis, in order to explain the reasons why we should do researches on it and which kind of system it would be at last. In a typical hostile acquisition, the bidder does not win the support from directorate in target company, sometimes the latter even takes some anti-takeover measures, so the former usually sends his offer directly to the shareholders and avoids directorate. The hostile takeover often occurs in tender offer, and it is full of antagonism, risk and aptotic target. Except the advantages of all kinds of takeovers, it has some special positive functions: change the manager team in target company, upgrade the company's value, and supervise the managers indirectly at last. So from the end of 19th century when it occurred, it becomes a wave all over the world, which will also arrive in China soon.In the second part, the thesis compares correlative legal systems from other countries or areas. After reviewing the legislations of tender offer and anti-takeover measures from Britain, America, the European Union, Germany, Korea, Japan, and Hongkong and Taiwan of China, we could find some facts: there are only two takeover modes, which are the British Mode and the American Mode, and the others are the results of imitation and innovation of them. But concerning the practice effect, the security markets in Britain and America develop better than any other countries. After learning the processes of imitation and innovation from other countries, we could come to the conclusions: there does not exist so-called the best mode but does exist the most suited mode to our fact on the base of imitation and innovation, so as to achieve the best practice effect and the most flourishing security market; under the background of global takeover wave, lawmakers should response immediately and do something relevant ahead of time, so as to deal with the impact in our market from the hostile takeover.In the third part, the thesis analyses the existing legislation and its limitation about the hostile takeover in our country. Firstly, the thesis introduces the existing legislation frame in our country, including the "Corporation Law", the "Security Law", and the "Administration of the Takeover of Listed Companies Procedures". Some principles about director's responsibilities occur in the "Corporation Law", some principles about operating measures in company takeover occur in the "Security Law", chapter 4, and the other supplements occur in the "Procedures". Secondly, the thesis points out that our existing legislation has many limitations: the existing legislation is not perfect; the rules' level is too low; the correlative regulations are not consistent with the others; the manner of mandatory offer has many rules about responsibility; the value orientation and function exertion of partial offer system needs perfection; the future of agreement takeover is not clear; the remission in tender offer does not fit to practice; the listed company and its directors do not disclose enough information in the course of takeover.In the fourth part, the thesis put forward some measures to improve the hostile takeover system in our country. We should encourage and support it, considering its huge market effect. The lawmakers should take our facts and potential future into account, improve its efficiency and emphasize procedure justice. In detail, the measures of perfection includes: establish regulations of mandatory offer; advance the threshold of mandatory offer; grant the mandatory share- purchased right to bidders; restrict bidders to purchase company's shares again; prevent controlling stakes from abusing their rights during the course of anti-takeover; establish the director's responsibility of good faith; exert the company's independence and the company charter's autonomy to carry out anti-takeover; perfect the information disclosure system of listed companies and their directors; persevere in the principle of moderate supervision and management; perfect the legal system of hostile takeover.