Market For Corporate Control And Its Legal Mechanism

As for the mainstream theory of the market for corporate control, the conspicuous mechanism of this market aforesaid lies in free exit right entitled to shareholder in lieu of the management whose operation is deemed to be inconsistent with maximization of the interest in share, in order to hold ultimate control of the corporate owned by him even under the circumstances of separation of corporate ownership and control right Thus both the theory above and systems designed thereafter are aimed at an approach to realize shareholder interest in face of the modern corporate governance. In an essence, the market for corporate control is just a restrictive mechanism for shareholder to the management. However with the change in theory and practice of the corporation law, fundamental premises included in this mechanism such as the leading role played by shareholder and accordingly maximization of the interest thereof have been challenged, particularly in 1980's thirty-five states in America modified their own corporation laws by which the traditional relationship regulated compulsorily changed in effect that director shall not exclusively pursue the interest in share, but consider the stakeholder interest in light of the transaction between shareholder and the acquirer which shall be subject to the corporate policy made on interest weighing by director.Then how to locate and further develop the theory systems of the market for corporate control? On analyzing the mainstream theory of the market for corporate control, this article try to recreate the theory, delving into the law systems separately based on the antitheses in the various arguments and seeking to constitute the new law systems for the market for corporate control, in order to perfect this market and its institutions of our own country. This article composes of five parts as follows:Part I--production in theory and predicament in practiceThis part begins with the production of this theory then outlines the mechanism and predicament of the theory of the market for corporate control. A basic limitation in respect of this article is also made in this part.Part II--mainstream theory systemsThis part focuses on the basic premises and the core positions of the mainstream theory. Firstly through three judgments included in the theory, this part analyzes the effective mechanism produced by the theory of the market for corporate control is aimed to tackle the corporate governance puzzle, reaching a general conclusion that the market for corporate control is exclusively for shareholder. Secondly, on speculation of the concept of the corporate, the control right and the market, this part gives a detailed analysis on the theory of the market for corporate control and its practical operation mechanism. Lastly these part outlines three representative positions, which is to prefer to the outside governance mechanism, underline merger and object any limitations on the merger.Part III-criticism and recreation on the theoryThis part challenges the premises and the core positions mentioned above. Firstly this part analyzes the topic about "shareholder is the ownership of the corporate" from the economic and lawful perspectives to point out such judgment included in the mainstream theory are not exact. Secondly this part criticizes the representative positions aforesaid in sequence, arguing that the market for the corporate control based on the inexact judgment has its deficiency. Lastly through the theoretical arrangement on the modern corporate governance, this part states that policy of the management shall consider the nonshareholder interest, thus realizing the recreation of the theory of the market for the corporate control.Part IV--criticism and recreation on the law systemsThis part concentrates on the law systems supported by the mainstream theory and its antithesis one. Firstly this part analyzes the law systems under the mainstream theory. Secondly this part gives a rethinking and criticism on the existing and representative law systems under the anti-ma...