Mbo And Its Legal Regulation,

Whether we should adopt the Management-Buyout(MBO)method or not has been a hot-point debated in academic area in last several years. After the Department of Finance stopped MBO in 2003, it seems it's not so meaningful to discuss this problem and the heating debates in academic circles are also cooling down gradually. However, we should see that the problem itself still exits and avoiding the problem never be the optimal solution. Four questions are posed before further discussions: First, are there any positive and important influences of MBO method in our national-owned-corporation reformation? If yes, what aspects we should make normalized? Why the Department of Finance decides to terminate MBO in 2003? The last question is what the common opinions about MBO are nowadays? My thesis mainly focuses on these questions and discusses them systematically. My thesis is divided into five parts:The first part introduces what is MBO, and analyzes the difference about the concept of "management" in our country and in the west. In our country, the management group or the "administration group" in national-owned corporations includes monitors and director, but it only includes mangers in the west. After these, the application of MBO in the west advanced countries and its positive effects are demonstrated; then, the goals of inducing MBO into our system and the troubles it causes during the realization are discussed; Finally, the factors which lead MBO cause totally different effects in our country and in the west are explored. This chapter also points out the importance and the significance of the research work in MBO, through discussing the laws, rules and policies currently made in this field by our government, and through pointing out the fact that such kind of buyout activities still be active in the whole country.The second part tries to erase the misunderstanding of MBO methods in theoretical levels. First, the confliction and the harmonization between the MBO method and the concept "self-advocacy" in our civil laws are analyzed."Self-advocacy" means the advocator use the privileges unlawfully for his or her own interest. It's possible that the management group sometimes use their power to proceed "self-advocacy". Therefore, it's important to make difference between the "self-advocacy" and the legal MBO. Second, we discuss whether the MBO method conflicts with the modern corporation management spirit, i.e. the separation of the ownership and the manager ship. The MBO method makes the ownership and the managership combined together in some aspects. However, it only tries to correct the too-highly-separated situation between these two parts. Furthermore, the reorganized corporations usually tend to make the ownership and the managership separated in different levels. In the last part of this chapter, the responsibilities of the management group are discussed in details during the realization of MBO.The third part analyzes the obstacles existing in law aspects when we try to realize MBO. First, we point out the existing difficult problems: the incompetence of the buying-side, the unreasonable buyout price and the capitalizing problems. Then we numerate the conflictions between the MBO method and the current civil laws. Finally, we conclude the lessons and achievement obtained during the realization of MBO in the last years. Some suggestions are proposed by the author respectively to these problems.The fourth part discusses why the MBO are terminated by the administration. The main reasons include: the huge national property loss, the embezzlement of the common shareholders' interest, the unprotected legal rights of the employees. In order to solve these problems, we proposed several methods. First, the proper price system should be established, including the suitable participants, the suitable price mechanism, and the proper estimation of the national properties. Then the national properties loss can be effectively prevented. The interest of the common shareholders can be ensured by establishing strict and public information-sharing mechanisms, improving the company manipulating structures, and establishing the suitable laws. Furthermore, the protection of the employee-rights can be solved by the emphasis on the inheritance of the labor contract and the restriction of the unemployment after therealization of MBO.The fifth part proposes some suggestions about how to normalize the MBO methods in law aspects. First, the principles for the normalization of MBO methods are proposed: justice, fairness, and publicity; step by step; using the market force as the main manipulator. So the dirty-box manipulations can be avoided. Second, another suggestion is proposed: establish normalized MBO rules and improve the supervision ability so that the better social and lawful surroundings for the realization of MBO can be obtained.