Research On The Compulsory Squeeze-outof Remaining Shares In The Acquisition Of Listed Companies-Investigation And Reference From The Perspective Of Comparative Law

Compulsory squeeze-out of remaining shares of a listed company during the acquisition process is a mechanism used by the acquirer,after holding certain percentage of share regulated by law,to force out the remaining shareholders at a proper price,the valuation mechanism of which differs in different jurisdictions,and finally get one hundred percent shares.Every squeeze-out,however,occurs in the zone of tension between the controlling shareholder's interest to maximize the efficiency of her investment,and the minority shareholder's interest to receive ful compensation for the loss of their shares.In the context of China,there is no such regulation of compulsory squeeze-out of remaining shares,but the establishment of this kind of rules has become an area of increasingly intense topic.However,the recent increase need ofsqueeze-outs in acquisition of listed companies poses a difficult question to scholars and practitioners as to how laws can promote transactional efficiency in squeeze-outs while guaranteeing proper protection of minority shareholders.In 2015,the China government released the amendment of Security Law,which announced its ambition to introduce this system in China.However,the relevant provision in this amendment was a little bit too general.When the final version of this amendment will be finished is uncertain at this moment,but the research on this systemshall be constantly conducted.After taking into accountthe regulatory experiencesin other leading jurisdictions from the perspective of comparative law,such as European Union,Germany,Britain and Korean,this article intends to explore the legal route of this system in China.This article aims to fill the gap of research on compulsory squeeze-out of remaining shares in China from the perspective of comparative law,and to provide a set of methods for the legislators to consider when regulating the compulsory squeeze-out of remaining shares.The first chapter describes the legal connotations ofcompulsory squeeze-out of remaining shares.This chapter begins with the definition of compulsory squeeze-out of remaining shares.Then this chapter figures out differences between the compulsory squeeze-out of remaining shares and other rules,such as the differences between compulsory squeeze-out of remaining shares and squeeze-out mergers,the differences between compulsory squeeze-out of remaining shares and compulsory sell-out,as well as the differences between compulsory squeeze-out of remaining shares and the withdrawal system of shareholders.Lastly,this chapter discusses the burdensome parts to legitimate this system in China in different aspects,such as the outdated ideas,the lack of upper level laws and the obstacles in practice caused by the lack of such rules.The second chapter explores the theoretical basis of this system.Firstly,this part discusses some concerns raised out from compulsory squeeze-out of remaining shares,including but not limited to its infringement on the property rights which results in the constitutionality issue,its violation of be basic principle of commercial law and its infringement on the legal interests of the shareholders.Then this chapter figures out that most of the concerns are baseless and may be addressed with appropriate legislation.Lastly,this chapter talks about the rationales and values for this system.For example,it may reduce the costs of the company to associate with the remaining shareholders;it may exclude the permanent litigation risks due to the existence of the remaining shareholders;it may enhance sociallydesirable acquisitions and exclude the free riders who intend to take advantage of the benefits of acquisitions.Given this system have many positive aspects,then how can this system be regulated? The third chapter explores the regulations of different routes to implement compulsory in several jurisdictions,such as European,Germany,Britain and Korean,where the system includes substantial as well as procedural requirements,such as the scope of application,the threshold,duration to exercise the right,proper procedure to exercise the right,the valuation mechanism and relevant remedies.All these different countries have both their own peculiarities and some similarities.The fourth chapter of this article tries to explore the route for China to establish the compulsory squeeze-out of remaining shares during the acquisition of listed companies.Firstly,this chapter studies the main ideas used when establishing Chinese version of compulsory squeeze-out of remaining shares,where the article figures out that the regulatory departments shall shift their outdated ideas,fasten the path to make certain rules and pay attention to the balance of efficiency and fairness.When intending to establish this system,the article addresses the threshold which needs to be met before these rights can be asserted,the calculation mechanism of the shareholding of the acquirer,the valuation method,the procedure used to compensate the remaining shareholders,duration,remedies for shareholders for disagreeing shareholders and other aspects.Lastly,this chapter emphasizes that enhancing the supervision of tender offer shall be followed during the implementation of this system.