On The Anti - Takeover Target Company And Its Legal Regulation

Anti-takeover arises from hostile takeover. When a corporation attempts to obtain control of other publicly held corporation by way of direct tender offer without seeking target's management agreement, hostile takeover happens. The former corporation is often called "aggressor corporation", and the latter the "target corporation".In hostile takeover, the objective of aggressor corporation is to obtain control of the target corporation, which puts great threats upon target's management. As a result, targets management often uses various defensive tactics to resist the aggressor.The battle between them brings about a series of legal issues. Many countries have passed rules for regulating the actions from target's management in order to guarantee the healthy development of corporation and security market.This article, adopting the approach of comparative law and of law interpretation, reviews and analyzes the main legal regulation concerning hostile takeover and anti-takeover, then puts forward some proposals and suggestions based on the actual circumstance of China.This article is divided into four parts logically besides an introduction.In the introduction, the concept and the forms of takeover are explained and reviewed. The author holds that anti-takeover arises from hostile takeover and regulations for them are important parts of takeover rules.Part I presents a general view about anti-takeover. The author holds that the core of anti-takeover is to make takeover bids more difficult either by making the target corporation unattractive or by making an unwanted takeover unduly expensive to the aggressor and therefore hard for him to get control of the target corporation. Moreover, the value of hostile takeover and anti-takeover has been analyzed.Part II deals with the two basic, but essential legal issues about the regulation of anti-takeover. One is who makes the anti-takeover decision, the shareholders meeting or the board of directors; the other is how to regulate target's management.Part III makes a comparative study on the various regulation for anti-takeover in foreign country, esp. UK and US. The author's conclusion is that the main aspects of the regulation for anti-takeover should be (a) the necessity of regulation; (b) who makes the decision; (c) how to regulate target's management in anti-takeover.Part IV the author puts forward suggestions and proposals for the legislation in China.