A Listed Company Anti-takeover Measures Study

Poison pill is known by the public after Sina set up poison pill as defense tactic against Shengda purchasing its stocks by tender offer, but in home there is no systematic study on poison pill. Poison pill was invented in the US at the beginning of the 80^th of the 20^th century. After that, the academic circle of corporation law made wide and thorough study on poison pill. But as for the attitudes to poison pill, huge differences exist in the academic circle. This article attempts, based on introducing and analyzing the current studies of poison pill in the US combined with the regulations on anti-takeover defenses of the other main jurisdictions, to make a comprehensive study on poison pill hoping it will benefit our country's anti-takeover defense of listed company and the latter corporate legislation.This article includes four parts and its conclusion.The first part introduces the anti-takeover defense of listed companies, makes clear the concept of anti-takeover defense of listed companies and establish the basic of the research of anti-takeover and poison pill. Anti-takeover is relative to the purchase especially to the hostile purchase. Purchase includes friendly purchase and hostile purchase. Next, it reveals the traits of anti-takeover, including definite purpose, specific object, complex subjects, various behavior and rivalry acts. Besides, according to the different practical phases, it divides the measures of anti-takeover into preventive and counterattacking measures. Preventive measures include poison pill, Shark Repellant, Employee Stock Ownership Plan (ESOP), Cross-holding, Parachute Plan. Counterattacking measures include Seeking the Support of Share-holders, Pac-man, Stock Repurchase, MBO, White Knight, Split-ups and Spin-offs, Green Mail and Litigation.The second part deals with the empirical study of poison pill. Poison pill is a sort of anti-takeover measure having developed in the booming hostile tender offer. It was first invented by a famous takeover lawyer Martin Lipton in America at the beginning of 80^th of the last century. The categories of poison pill are constantly changing after poison pill came into existence. Up to present, the following classic poison pill has come out: Preferred Stock Plans, Flip-Over Poison Pills, Flip-in Poison Pills, Back-End Plans, Voting Plans. Other researches divide the poison pill into Bond Poison Pill and Employee Poison Pill. In the Value analysis of Poison Pill, some think that Poison Pill setting is unfavorable to the target company while others think it is favorable. I agree with the latter view.The third part is concerned with the comparative study of the regulation on anti-takeover tactic of poison pill. This part firstly reviews the attitude of the Delaware's courts to poison pill. Generally speaking, Delaware's courts support the poison pill, but try to limit the setting of poison pill through several famous cases. In the case of Unocal, the below two equitable standards must satisfy before the board of directors set up poison pill, i.e., first, the takeover bid brings threat to the corporation; second, to set up a poison pill is reasonable and proportional. In the case of Unitrin, requiring the setting of poison pill is neither coercive nor exclusive. In British, London City's Code forbids the board of directors adopting anti-takeover defenses in general. The Proposed Thirteenth EU Directive prohibits the board of directors solely setting up the anti-takeover tactics, so it is natural that the board of directors has no rights to solely set up poison pill. In Germany, the management board can set up the anti-takeover defenses only after the consent of the board of supervisors has been got or authorized by the general meeting of stockholders. I think that the regulation mode of poison pill in Britain, EU and Germany is preferable compared with in China.The forth part is concerned with the feasibility analysis of the application of poison pill in China. With the development of market economy, corporation purchasing became more and more active. So did the action of anti-takeover. Poison pill tactic has been emulated by a lot of listed companies in China. The scholars who take a negative attitude to poison pill believe that under the current legal system, poison pill have not the foundation of legitimacy. Therefore, there is no room for practice. The scholars who take a partly positive attitude think that Preferred Stock Plans are prohibited but if we make a little design for conversion provisions when issuing convertible bond, poison pill is feasible as preventive measures. I think that poison pill is legitimate and can be applied by listed companies as anti-takeover tactics.The conclusion of this article makes it clear that though most public corporations in the US have set up poison pill as an anti-takeover tactic and the poison pill is approved by courts, the argument on poison pill in the company academic circle has never ceased. This article reiterates, not only from the value of poison pill, but also from the regulation mode of it and from the infrastructure elements of the company market, that Chinese listed companies have possessed the conditions required for setting up poison pill.