Listed Companies In The Anti-takeover Law Regulation

With the development of security market, takeover and takeover defense action are increasingly alive in China. Regulations on the Takeover of Listed Companies ("Regulation"), the applicable law governing takeover which was modified in 2006, to some extent, adopts UK's shareholder model by requiring target company directors to desist from defensive measures without shareholder approval and also mentions the duty of target company directors and controlling shareholders in the face of an ongoing takeover. However, the law is still unclear and incomplete, especially in the legal judgment standard of defensive measures and the protection of minority shareholder's interest under the Shareholder Model. This paper suggests possible legal improvement to China's current takeover legislation framework by comparing and analyzing the UK and US takeover legislation and practice.Section One discusses the reasonableness of takeover defense by target company. It first points out that the concept of hostile takeover in this paper is defined based on the attitude of target company management towards hostile takeover with no merit judgment involved. Then it analyzes the positive role of hostile takeover and its limitation in corporate governance.Section Two and Section Three discuss the decision making model of takeover defense. After the reasonableness of takeover defense, the next question is how to solve the interest conflict between target company board and shareholder in the control contest. The paper proposes to adopt UK's shareholder model by giving shareholder final decision.Section Four discusses how to improve the shareholder model with focus on how to prevent the controlling shareholder from abusing its dominant position to damage the minority shareholder's interest. The paper proposes to impose fiduciary duty on controlling shareholder and give minority shareholders more rights, increase the efficiency of shareholder meeting by utilizing the internet voting system and give certain anti-takeover rights to target board.