Protection Of The Rights Of Minority Shareholders Of Target Corporations In Hostile Takeovers

During hostile takeovers of listed corporations, it is necessary to protect the rights of shareholders in target corporations, especially those of minority shareholders who are in an inferior position. It is both the starting point of regulation on hostile takeovers by law and the final goal of justice of law. In this paper, according to present situation of listed corporations in China, the author introduces the legislative experience of other countries, and analyzes the drawbacks of legislation and reasons in our country, and then puts forward some advice to strengthen the regulation for acquirers, boards of directors and controlling shareholders of target corporations, Meanwhile, he poses the improving measures on protection of the rights of minority shareholders. Therefore, the goal of protection for rights of minority shareholders can be reached.In Chapter 1, the concept of hostile takeover is defined and the theoretic bases about protection of rights of minority shareholders are analyzed. In Chapter 2, the legislations to protect rights of minority shareholders in hostile takeovers in U.K., America, the European Union and China are analyzed. In Chapter 3, through introducing the cases about information disclosure, the drawbacks of protection for rights of minority shareholders are deeply analyzed. In Chapter 4, the author puts forward some advice on how to protect them in hostile takeovers. In Subchapter 1, the acquirers' disclosing true information and the improvement of mandatory tender offer system are strongly emphasized, and the establishment of system of civil compensation is mentioned. In Subchapter 2, it is suggested that fiduciary duty to minority shareholders from the boards of directors and the directors' compensation system should be set up. In Subchapter 3, it is advised that fiduciary duty to minority shareholders and the system of civil compensation from controlling shareholders should be built. In Chapter 4, that the convenient judicial remedy system should be given to minority shareholders in their actions is suggested. In Subchapter 5, it is put forward that the power of Security Supervising and Management Committee of exemption of mandatory tender offer should be restricted.