Protection Of The Interests Of Minority Shareholders In China’s Going Private Transaction

Going Private Transaction is a special M&A transactions,which first born in Europe and other developed stock market,now is a common phenomenon in the European and American stock market.Going Private Transaction enable a listed companies delisting from the stock market and enable the company to be high concentratedly controlled.The company can be concentratedly controlled so that it can implement operating strategic adjustments and avoid cost of maintaining listing on securities market and Regulatory costs.Special Going Private Transaction is M&A transactions that is a kind of especially vulnerable to the interests of minority shareholders. Promoters of Going Private Transaction controlling both the merger parties of the transaction,the transaction conditions and price can easily be manipulated by the promoters to result the detriment of the interests of minority shareholders.Embodiment of Going Private Transaction also varied,and this led to the Going Private Transaction operability with strong technical,thus increasing the difficulty of regulating.Since the birth of the Going Private Transaction,the dispute continued and accompanied by continuous improvement of regulating Means. Now Europe legislation, securities regulators and the courts have affirmed the value of Going Private Transaction,and established more comprehensive regulatory means to ensure that the transaction will not infringe the interests of minority shareholders. As the U.S. stock market benchmark status in the world securities market,its regulation means are widespread and learn by other securities markets.After 2005 the Share Segregation Reform, PetroChina,Sinopec and other several companies owned subsidiary of the implementation of its Going Private Transaction. These transactions led to media attention and triggered a discussion of the financial sector over Going Private Transaction. However, more attention is about motivation and purpose of promoters of Going Private Transaction, and for the protection of minority shareholders is small.The set-up time of China’s stock market is short and the development scale is large,every aspects such as the legislative, the regulatory and other are still immature. Currently Listed Companies in China’s stock market is still a scarce resource so that Few companies are willing to going private.with reference to the development process of developed stock market which a healthy future for China’s stock market can be predicted in that a listed company must be there come and go.Going Private Transaction as an important way of delisting should be valued.Going privatization transactions of PetroChina and Sinopec exposed the inadequacies of China’s securities law and securities regulation.Chinese law had no means for regulating the going privatization transaction,delisting system is also imperfect,China’s Securities Regulatory Commission is in fact treated the Going Private Transaction as an ordinary M&A transactions. Although the quantity of Going Private Transaction are little,but may simply because the emergence of Share Segregation Reform,but the problems exposed should not be overlooked.The focus of this paper is to study the problem of protecting the interests of minority shareholders in Going Private Transaction. Going Private Transaction is essentially a practice that crowding out minority shareholders by means of mergers and acquisitions made by the Company or a related person whose shares control the company’s behavior. Small shareholders and promoters are in fighting state in Going Private Transaction,but is unbalanced in ablility of geting management information,negotiation and vindicate rights.Obvious weak position of minority shareholders in the process make extremely passive in its fighting against major shareholders, as the major shareholder promoters indeed take an advantage of it.To achieve a fair balance of the strength of this position,the interests of minority shareholders is needed by special protection.This paper analyzes draw on the securities market,especially the U.S. securities market regulation method of Going Private Transactions.These methods which based on the United States System,may not be fitly copied into China,but in view of the inherent characteristics of the Going Private Transaction itself,many be learned from to perfect China’s regulatory instruments.This article hopes to work up the regulation of the securities market means that is suitable for China’s legal system by learning from these mature approach.