On Hostile Takeover In The Protection Of Rights

Protection of rights in connection with hostile M&As are comprehensive: controlling, minority and non-voting shareholders of both acquiring and target corporations have their respective claims for the protection of their rights in the hostile M&As; creditors to both acquiring and target corporation have their claims for the protection of their rights in the hostile M&As; the public have their claims for the protection of their rights in the hostile M&As, and even the management of both acquiring and target corporations, who tend to infringe the rights of the other relevant parties in the hostile M&As due to their special status, have their own claims for the protection of their rights. Consequently, all claims should be balanced without prejudice, otherwise, the imbalance will result in such negative consequences as infringement to the rights of minority shareholders, harm to corporations'credits and their abilities of funding, injury to positivity of the management, which may impact the management's deciding of initiating or handling M&As. Such negative consequences may injure efficiency and equity and hinder the increase of the social welware which is expected to be resulted from the scale benefits of M&As. Based on the above analysis, it is advisable to clearly divide the boundaries of the rights between each group such as controlling shareholders, minority shareholders, non-voting shareholders, creditors, employees, management and the public according to the dividing line of the competitive balance of efficiency and equity.This article is composed of four parts as follows:The first part is the Introduction of this article. In the Introduction, the subject and scope of this article are clearly defined through the comparative analysis of the three basic problems (i.e., types of companies/corporations, types of shares, and types of M&As). The subject is the hostile M&As which belong to the stock acquisitions (especially th squeeze-out acquisition) and the scope of such subject is limited to the corporation (or the limited liability company by shares) which issue common stocks and special stockes including the priority and non-voting ones.The second part is the Concept and Causes of Production of Hostile M&As. In this part, the concept of M&As is first introduced and the concept of the hostile M&As is derivated from the former. Following the introduction of the causes of the production of the hostile M&As, it is dissertated that, although the quantity of the hostile M&As in the PRC is few, it can be expected that the hostile M&As will thrive soon and the regulation of the hostile M&As will become the emphasis of the legislation and the administration of justice because the causes of the production of the hostile M&As have emerged in the PRC.The third part is the Value Balance of Protection of Rights in Hostile M&As. Both the efficiency and equity are the values that should be emphasized in the protection of the rights in the hostile M&As, but it is the"competitive balance of efficiency and equity"that should be the line dividing the boundaries of the rights of each group.The fourth part is the emphasis of this article. By analyzing concretely certain legal systems or tools which are for the purpose of the protection of the rights of conrolling shareholders, minority shareholders, non-voting shareholders, management, creditors, employees and the public respectively, it can be found how the competitive balance of the efficiency and equity is or should be carried out in the protection of the rights in the hostile M&As.The writer tries to fully understand the original edition of the English materials with respect to the USA laws and regulations relevant with the hostile M&As. Meanwhile, the writer tries to make thorough legal research on the PRC laws and regulations relevant with the hostilce M&As. Based on the above understanding and legal research and using the study methods of concept analysis, comparative analysis, and economic analysis, the writer indicates the differences between the USA and PRC laws and regulations regarding the hostile M&As and the problems existing in the PRC laws and regulations regarding the hostile M&As. Based on such differences and problems, the writer further proposes her recommended solutions to the protection of the rights in the hostile M&As in this article.