The Study Of Legal Regulation Of Hostile Takeovers

Hostile takeover is one way of the taking over listed companies. Its biggest characteristic is taking control of the listed companies without negotiating with the management of the target company. On the one hand, hostile takeover can produce the effect of external supervision for the company’s management, reduce agency cost between shareholders and directors, make up the lack of corporate governance structure; at the same time, it can also eliminate inefficient management, achieve the optimal allocation of resources, and improve the production efficiency of the whole society. On the other hand, hostile takeover may make a big difference to the target company’s stock price and the stock market, and often damage the interests of the target company shareholders, especially the small and medium-sized shareholders. Penman holds that in the treatment of hostile takeover we should adopt the view of eclecticism: namely we can’t deny its efficiency value for it will bring the problem of fairness. The key lies in how we design the legal system, so that we can give consideration to both efficiency and fairness, make its maximum play role to the promotion of efficiency, and reduce its negative effects. Therefore, on this basis, this paper puts forward the basic principles of legal regulation, namely the principle of equal treatment of shareholders, the principle of information disclosure and the principle of protecting the small and medium-sized shareholders, and from two angles(the acquirer and the target company), propounds suggestions of regulating the hostile takeover of China.