"Poison Pill" The Regulation Of Research

The so-called "poison pill", which was invented by US attorney Martin Lipton in the1980s, is a defensive measure used by targets of hostile takeover bids. Poison pill has beenwidely used in the developed countries and regions,such as the United States, Britain, Canada,Japan, the European Union and other capital market. However it is not known by the publicuntil Sina set up poison pill as defense tactic against Shengda purchasing its stocks by tenderoffer, but in home there is no systemic study of poison pill. With the completion of the splitstructure reform on shareholding, the market of control power over companies in Chinamoves towards a new era,which also opens an infinite space for the development of hostiletakeover. As the spontaneous product used by the target company to respond to the hostiletakeover, Poison pill can go with external legislation and regulatory, on behalf ofnon-marketforces,to limit the negative effects of acquisitions, especially it is more useful and meaningfulfor the control market like China with rising development of emerging market.Nowadays, China’s anti-takeover legal system is still in the initial stage, which lacks theeffective regulation of the anti-takeover, some of the target companies abuse "poison pill","white knight" as anti-takeover measures to control of the Board of Directors, while others orthe management take joint petition, seek help from the Government and other unconventionalmeasures to reverse takeover. The imperfect anti-takeover measures and imperfectanti-acquisition system inhibit the healthy development of the control market in China, lead tothe lawful rights and interests of anti-takeover disorder, and make damages to the targetcompany, shareholders and other interest holders. Consequently China should improve theanti takeover system, especially to speed up the legalization process of the "poison pill" andother anti-takeover measures, in order to meet the development needs of the market of thecontrol right.This paper will analyze the market and institutional existing environment of the "poisonpill", using the method of historical analysis to introduce the operation principle,evolutionand the value of the "poison pill". After the comparison of the related systems of Britain, the United States, Canada, Japan, the European Union and so on, we can find that the existenceof a "poison pill" bases on the development of the controlling market, on condition that theanti-acquisition system is improved in some degree. Aimed at the China’s market andinstitutional environment,this text conduct an feasibility analysis of the "poison pill", thendraw a conclusion that the market of company-controlling in China has accepted the "poisonpill" in urgent need of "poison pill" system supply. Based on China’s market characteristicsand institutional environment, referenced the experience of Japan,this paper is to buildChina’s "poison pill" regulation system, hoping that it can be helpful for the perfection ofChina’s anti-takeover regulation.