On Offer For The Acquisition Of Target Company In The Interests Of Minority Shareholders Protection

Under the environment of market economy of free competition,company acquisition has become the consequent choice for rapid expansion and development of a company by reason of its distinct traits of optimization of resource allocation,efficient consolidation of the whole industry chains and improvement of efficiency of company operation management.Advancement of market economy in our country and maturity of the security market provide more favorable objective premise for company acquisition in which listed company acquisition has played an important role as well as the way of takeover has been a significant means of company acquisition.However,during the takeover process,interest and right of small shareholders of the target company are easily to be infringed because of the weak position and less proportion of shares lacking of the activity to involve in the company operation management demonstrating rational coldness and pick-up attitude.Encountered with the possible unfair phenomenon during the takeover process,some special protection shall be carried out for the small shareholders of the target company during the takeover process in line with the principle of equal status among the shareholders and good faith principle.Specifically,potential threats to the small shareholders of target company from two sides including purchaser and major shareholders and managers from the target company.Therefore,research on protection of small shareholders' interest and right of the target company also means study on the behavioral regulation with respect to the purchasers and the major shareholders and managers of the target company.Pitiably,law could not be operated automatically and could not fully protect the interest and right of the small shareholders of targeted company from the malpractice exercised by the purchasers and major shareholders and managers of the target company even that necessary regulations have been imposed upon them.Thus,it is urgent to integrate related civil remedies in order to give full and efficient protection the interest and right of the small shareholders of targeted company.In consideration of this,this paper deliberates on protection of interest and fight of small shareholders of targeted company during the takeover process in the following three facets.In part one,the purchaser is in predominant position and usually initiates a takeover after well-planned and careful arrangement during the takeover process.Under this circumstance,small shareholders of targeted company assume great pressure and lack in capability to bargain with the purchaser caused by the differentiation of capital and information access thereby these small shareholders are inevitably in the weak position.It is imperative to lay down regulations on acquisition of the purchaser in order to safeguard small shareholders' interest and fight from the purchaser's malpractice in the name of minimization of acquisition cost and enhancing acquisition efficiency. Firstly,small shareholders of the targeted company shall be backed with enough information for decision of acceptance or rejection under the condition of takeover nevertheless it is an inevitable deficiency in access to information by reason of limited capital and capability.To ensure that the plentitude and necessary information and true,accurate,unabridged,and updated publication of related important information with regard to acquisition shall be offered by the purchaser is the foundation of interest and right protection for the small shareholders of targeted company.Secondly,clarification of determination criteria of unanimous acts and its legal duty and liability is crucial for reducing the potential threats to the interest and fight of the small shareholders during the takeover process.At last,compulsory takeover system shall be introduced in terms of protection of interest and right of small shareholders of the targeted company.It is necessary to perfect the compulsory takeover system under the current economic development and legislation process although it is still in disputes.In part two,it is negative in effect that the transference of the targeted company to the purchaser in case of successful takeover would produce significant impact on major shareholders and managers of the targeted company.Thus,major shareholders and managers of the targeted company would probably adopt some anti-takeover measures to handicap or crumble the takeover by taking advantage of the company resources and the small shareholders of the targeted company fails to exercise efficient influence to the decision of the company and to protect their own interest and rights.Thus,it is urgent to regulate anti-takeover behavior with measures like endowing the general meeting of shareholders with the decision right and introduction of related shareholder decision fight avoidance system voting right collection system in the decision procedure in order to erase the possibility of the abuse of capital majority determination principle.At the same time imposing the managers with duties of provide takeover support and related information to the shareholders guaranteeing that behaviors of the managers of the targeted company meet the interest of the company shareholders.In the third part,it is still unavoidable to protect the interest and right of the small shareholders of the targeted company from the major shareholders and managers of the targeted company with predominant position for the interest of their own although related legislation has established with respect to acquisition and anti-acquisition behaviors because takeover revolves substantial interests.How to provide sufficient and immediate remedy to the small shareholders is worth studying when infringement takes place.During the takeover process,behaviors undermining the interest and right of the small shareholder of targeted company mainly include untrue publication,inside trade and manager's breach of legal duty.For full protection of right of the small shareholder of targeted company in the takeover process requires the perfection of related civil remedies in the legislation in order that interest and right of the small shareholder of targeted company could be remedied in case of being damaged with compensation in maxim extent through legal approaches.Meanwhile,legal interests of other entities during the takeover could not be ignored in emphasizing the protection of interest and right of the small shareholder of targeted company.Takeovers play an active role in accelerating the social development and economic advancement though probably harm the interest and right of the small shareholder of targeted company.Therefore, comprehensive discretion of interests of all parties during the takeover based on protection of interest and right of the small shareholder of targeted company through legislation perfection shall balance the economic efficiency actualization and principle of justice and fairness.