An Analysis Of The Target Company's Anti-Takeover Decision-Making Power

The anti-takeover activities have become more frequent followed the M & A activities of listed companies increases every year, with the development and improvement of Chinese securities market, and the increased number of the takeover purpose of achieving the control of target company and the means of acquisition more tricky. At present the attitude for anti-takeover is still in wait and see, while the tendency of Chinese legislation is encouraging acquisition and reorganization listed companies. The target company's management is the most active subject in the anti-takeover activities, particularly the board of directors, whose roles and power in the anti-takeover are universal concern, because of the interest conflict between the management and the shareholders of the target company.Looking literatures about the anti-takeover decision-making power, the majority view is the appropriatest model suited to China is the British anti-takeover decision-making power model which severely restricts the board of directors. What remains puzzling is that Chinese anti-takeover practices are produced and develop under the auspices of the board of directors, as shareholders in the anti-takeover activities play a role who listen to the recommendations of the board and inspect slightly. The contradiction between the theory recommended model and the practice developing model promote the author to study in depth a large number of cases and the theory sources of senior scholars, compare the anti-takeover decision-making power mode in the United States with the European Union (including the U.K., Germany), focus on the causes of national anti-takeover decision-making power model.The system must have its appropriate environment to act, so transplanting foreign system model must be combined with conditions of its existence. A systematic analysis of the emergence and existence value of anti-takeover and a particular analysis of the characteristics of anti-takeover measures, combined with Chinese internal governance legislation, comparing with anti-takeover models and their causes in the U.S. and the E.U., the U.K., Germany, on the basis of Chinese national conditions, taking full account of the company's control mechanisms and external market conditions, this paper conclude the best model of the target company's anti-takeover decision-making power is conferred on the board of directors. The first chapter lays a basis for the anti-takeover decision-making power discussion and reveals the nature of this problem. The three sections in this chapter is a progressive relationship, that previous section is the prerequisite and foundation of later section. Section I is in order to solve the attitude that the anti-takeover legislation shall hold on the value of the anti-takeover that if anti-takeover has negative value and no positive value, it should be a total ban on anti-takeover, then about who is entitled to make decisions on anti-takeover discussion lost the foundation. Section II analyzes specific anti-takeover measures, which help us to understand the anti-takeover decision-making power does not belong to a subject or a certain kind of authority, but the possible anti-takeover competence of the principal authority. Section III analyzes the anti-takeover rights of shareholders and the board of directors by analyzing the legitimate authority they have, and reveals that the anti-takeover decision-making power redistribute the authority of shareholders and the board of directors, and this re distribution is the forefront of corporate governance reform.The second chapter analyzes the typical mode of anti-takeover decision-making power established by the U.S. state law and the EU's anti-takeover directive, and analyzes the causes of the mode by observing context of its corporate system and the market environment. The U.S. is the world's most economically developed country, but also the most advanced country of the development of anti-takeover, whose corporate governance theory and the anti-takeover decision-making mode are the study object. To compete with the U.S., E.U. implement a unified anti-takeover legislation which encounter Germany's resistance. This makes Germany being an interesting case. The U.K.'s anti-takeover legislation is the prototype of the E.U. decision-making mode. Scholars who support the U.K. mode have considerable research on City Code to establish the anti-takeover decision-making power. Study how other countries' anti-takeover modes are and try to find why will help extracting the factors in the third chapter about Chinese anti-takeover decision-making power.The third chapter analyzes the company's internal control, external control and the subject who has the decision-making power. These factors could help China find its suitable anti-takeover decision-making power mode. The conclusion is the board of directors' decision-making mode is the best option when the rights of shareholders are protected. Section I prove that anti-takeover decision-making power which is set up by the new development in accordance with corporate governance can properly solve the existing problems by analyzing the relationship between shareholders and directors and the problem of protecting minority shareholders. The first part of Section II utilizes the corporate social responsibility theory and the stakeholder theory to analyze the impact of company's anti-takeover decision-making power on other subjects. The second part prove that setting up the board of directors' decision-making mode is also the right choice when consider the needs and development of the capital market in the macro point of view. Section III is about the subject who has the decision-making power. The board of directors' decision-making mode is the best choice, and this conclusion is the foundation of the issue about how to regulate the obligations of directors.