Acquisition Of Listed Companies Information Disclosure Obligations

Takeover of listed companies refers to an act which enables a purchaser toacquire or consolidate the control right of a listed company if, through purchasingstocks legally listed and traded, the investor holds a certain proportion of the sharesissued by the said listed company. As a primary manner and instrument ofdeveloping, expanding and adjusting a listed company, acquisition played asignificant role in the growth history of western enterprises. However, acquisitionby a listed company has its pros and cons all the while. Securities supervisors inevery nation have always been pursuing the goal to protect minor shareholders,prevent such fraudulent activities as insider dealing and market manipulation.Concerning the supervision philosophy in each nation's securities market, the basictrend is from the substantial supervision philosophy, i.e. the control philosophy,towards the publicity philosophy, i.e. the information disclosure philosophy. Thisarticle mainly addresses the information disclosure system of takeover of listedcompanies.The article includes seven chapters:The first chapter specifies the definition and classifications of takeover of listedcompanies. It also explains such concepts as takeover by offer, takeover by agreementand takeover in an open market.The second chapter reviews the development of the legislative philosophy ofsupervising takeover of listed companies, so as to illuminate the dominant role of thepublicity philosophy in current supervision of securities market. Therefore, relevantinformation must be disclosed to achieve justice and efficiency.The third chapter macroscopically discusses the necessity of the informationdisclosure system and then makes economic and jurisprudential analyses. Theeconomic analysis is carried out from the following perspectives, resource allocationtheory, information allocation theory, incompatible usage theory and transaction coststheory. The jurisprudential analysis involves the duty of care and the duty of loyaltyon the part of purchasers, major shareholders and directors of the targeted company.The fourth chapter illustrates the subject of information disclosure during thetakeover of listed companies, and expounds information disclosure by personscooperating with each other.The fifth chapter, using the comparative methodology, discusses the main contentof information disclosure in case of takeover of listed companies, which includeswarning information disclosure system, information disclosure prohibition concerningtakeover by offer and information disclosure requirements of directors in the targetedcompany.The sixth chapter mainly discusses the problems existing in the currentinformation disclosure system in China and some countermeasures.The last chapter comes to the conclusion that information disclosure concerningtakeover of listed companies should be strengthened.