Listed Companies To Absorb The Problems Of Protection Of Shareholders' Equity In The Merger - Merger Talk About, Absorbed From The Tcl

Merger is an important means by which the reorganization of enterprises happens and which' enjoy certain unique merits. Listed corporations have showed a preference for merger as the means of reorganization, outstanding examples include that Tsinghua Tongfang has Lunyin Electronics merged and TCL Group has TCL Communications. However, vis-a-vis the market practice in China, the legal regime for corporation merge is far from being able to meet the demand. This issue is particularly acute in cases where listed corporations themselves are merged in that law fails to offer meaningful legal protection for small investors whose interests may be harmed by the controlling shareholders and other interested parties. Small investors are the foundation for the prosperity of securities market. The protection of small investors carries heavy weight for the healthy development of securities market and for the continued confidence of small investors on the market. This paper aims to offer an insight into the protection of shareholders' rights in the merger of listed corporations.The first chapter offers an account of corporation merger, including its definition, specific means, legal attributes and the relations of shareholders' rights, etc. The chapter goes further to analyze the relations between consolidation and merger and their respective merits and demerits. The second chapter centers around the protection of shareholders' right and discusses the fiduciary duties of directors and controlling shareholders. This chapter particularly focuses around the fiduciary duty in the process of merger.The third chapter discusses the status quo of the protection of shareholders in China' s listed corporations in terms of both legislature and judiciary perspectives. For example, controlling shareholders often occupy a disproportionately strong position in listed corporations. The shareholders of shares in circulation are too dispersed and there are phenomena of insiders' control. Through analysis, small investors in listed corporations are at a weak position and full legal protection shall be provided for. On the basis of China' s particular circumstances, China should draw upon the experience of other foreign countries so as to achieve a well-defined legal framework for the protection of shareholders' interests in the process of merger involving listed corporations. Thus, in chapter 4 of this paper, this author discusses in detail how to provide for the fiduciary duties of directors and controlling shareholders and to how to provide for the voting rights, appraisal rights and derivative suits of shareholders. This author goes further to offer her suggestions with regard to the current legal framework in China.