On The Legal Norms Of Mergers And Acquisitions Of Listed Companies In China

Stock-for-stock M&A provides a maximum probability to company expansion; itnot only has a saving effect on transaction cost compared to cash payment, but alsocan avoid tax and increase share growth expectation from financial prospect.Consequently, as the international financial environment being more flexible,stock-for-stock M&A has become more and more popular. Though stock-for-stockM&A does not have a long history in China, it has been recognized as a legal form ofM&A by the Regulations on the Takeover of Listed Companies promulgated onSeptember2002. After that, the accomplishment of the Equity Division Reformeliminated the obstacle that the share exchange ratio cannot be determined. As such,much more stock-for-stock M&A cases appeared in Chinese stock market. This paperfocuses on the legal issues existing in current stock-for-stock M&A cases incurred inChinese stock market. It compared the laws and regulations related tostock-for-stock M&A in China to those in Western countries, analyzed a typical M&Acase that Midea Group acquired Media Electrical Equipment by way ofstock-for-stock, discussed the legal issues related to stock-for-stock M&A in Chinesestock market and gave specific solutions and suggestions.This paper includes five chapters.The first chapter gives general description of development of the stock-for-stockM&A in China, including its acquisition motives, and brief introduction on the historyand future of the stock-for-stock M&A development.The second chapter gives an introduction and assessment about the law andregulations related to the stock-for-stock M&A in China. It reveals six existingproblems and shortage therein. It also further analyzes a real case of a non-listingcompany acquiring an A share company by way of stock for stock M&A, i.e. MideaGroup acquired Media Electrical Equipment.The third chapter introduces the laws and regulations on stock-for-stock M&A inUnited States in order to use western experiences for our reference to develop ourown laws and regulations on stock-for-stock M&A. Based on the discussion and analysis of Chapter two and three, the fourthchapter discusses the legal norms and legislative thinking of the stock-for-stock M&Ain our country. The author gives his own thinking about the legislative suggestionsrelated to stock-for-stock M&A in Chinese stock market.The fifth chapter is a conclusion for this paper.The author want to make his suggestions on existing legal issues ofstock-for-stock M&A in Chinese stock market and believe that such suggestion shouldhave positive impact on the development of the law and regulations by legislativeauthorities as well as a practical advice on the legal study and research in universitiesand law firms.