On The Mandatory Takeover Offer And Protection Of Minority Shareholders’ Interests

The system of mandatory takeover offer is an very important legal system duringthe acquisitions of listed companies, whose main purpose is to protect the interests ofminority shareholders. Many countries in the world have implemented this system,however, due to different reasons, such as the degree of development and thedifference of equity distribution, there are some differences of related specificprovisions. Since1993, China has formally formulated this system in the relevantlaws and regulations and kept improving it in the subsequent legislative activities. Inthe mandatory takeover offer, because of the access to information, the lack ofbargaining capability and their own reasons, etc., the minority shareholders areobviously in a weaker position and their interests are often infracted by the offerors,the major shareholders and the management of the target company. Therefore, due tothe principles of “fair, just and open” in the stock market, minority shareholdersshould be especially protected. And the exemption system among this, can guaranteethe efficiency of the stock market and the vitality of acquisitions activities, andsimultaneously can realize the protection of minority shareholders. Starting from theanalysis of the three acquisition cases, combining the existing problems, this paperelaborates the system of mandatory takeover offer of China and gives some improvingsuggestions, so this system can play a more important role in protecting the interestsof minority shareholders. This paper is divided into four parts, besides the introduction and epilogue, itscontents are as follows：The first part starts from the elaboration of basic concepts and features, selectsthree acquisition cases: the first one is China’s first mandatory takeover offer--theacquisition of Nanjing iron&steel’s share; the second one is China’s first partialmandatory takeover offer--the acquisition of Supor’s share; and the third one isChina’s first dispute of mandatory takeover offer--the acquisition of All DieselPower’s share. Based on these three cases, this paper analyses the shortage of China’scurrent system of mandatory takeover offer.The second part elaborates the influence to interests of minority shareholdersand the basis of protection in this system. Starting from the possibility of theirinterests’ being infracted, this part explains the legal basis of this special protection,that’s the principle of equality of shareholders, the principle of honesty and theconcept of the moderate inclination to vulnerable shareholders.The third part elaborates the exemption system’s special protection of minorityshareholders. As an important part of the whole system of mandatory takeover offer,cored of protecting the interests of minority shareholders, in the principle of achievingfairness and efficiency, specifically elaborates the reasons, functions and specificcontents of exemption, and finally proposes what to be improved.The last part proposes some suggestions to improve the system of mandatorytakeover offer. As far as this paper’s concerned, through doing these things below canmake this system function better, such as: improve the specific regulation of thesystem, strengthen information disclosure obligations, establish and enhance theanti-takeover system, and improve the civil remedies of minority shareholders.