The Legality Of The Anti-takeover Provisions In The Articles Of Association Of Listed Companies In China

With the increasing number of hostile takeovers on the Chinese stock market,listed companies taking anti-takeovers are also rapidly increasing.Many listed companies with relatively dispersed shareholding structures have amended their articles of incorporation and added various types of anti-takeover clauses in the hope that they can effectively resist the invasion of "barbarians”at the entrance.As China's legal system for the regulation of anti-takeover clauses has not been established,the anti-takeover clauses in practice have been varied and mixed.There are even suspicions that damage the interests of small and medium shareholders,excessive protection of the company's directors,supervisors and other management,improperly hinder the well-informed acquisition of listed companies,and so on,triggering fierce discussions in the community and the securities regulator's extra attention.This requires a legal analysis of the anti-takeover provisions of the listed company's articles of association within the current legal framework in China.One can be used as a reference for subsequent legislation,and secondly,it can guide the practice of listed companies in anti-takeovers.Especially in the course of the anti-takeover of listed companies,the legality of their anti-takeover clauses must be closely analyzed.Otherwise,it is very likely that the anti-takeover clauses set by them are unreasonable or unlawful and they are found to be invalid,eventually leading to the failure of anti-takeovers.The main content of this article is divided into four chapters.The first chapter introduces related concepts such as acquisition,hostile takeover,reverse takeover,and reverse takeover clauses.In combination with the articles of association of 10 listed companies such as Yili,Shandong Jintai and Yahua Group,the main types of anti-takeover clauses of listed companies in China were introduced in detail.The second chapter elaborates on the necessity of the legality analysis of the anti-takeover provisions of the listed companies in China.The first is the existence of difficulties in the judgment of the legality of anti-takeover clauses.The existing legal regulations on anti-takeover clauses are incomplete,and the legitimacy of the various anti-takeover clauses is questionable.Second,the analysis of the legitimacy of the anti-takeover clause involves multiple interests.Third,the anti-takeover provisions have both positive and negative effects.They need to be viewed in a dialectical manner and used with caution.The third chapter specifically analyzes the legality of the anti-takeover provisions of the listed companies in China,which is the focus of this article.First of all,it is necessary to clearly determine the principle of the legality of anti-takeover clauses,and there must be no violation of the principle of mandatory provisions of the law,the principle of equality of shareholders,and the principles of loyalty and diligence of the management.Then under the guidance of these three principles,the main anti-takeover clauses such as absolute majority clauses,intertwined board clauses,shareholders'proposal restriction clauses,restrictions on directors'eligibility clauses,and gold parachute clauses were analyzed one by one,taking into account various factors.Finally,according to the specific circumstances to determine whether the anti-takeover clause is legal or not.The fourth chapter gives recommendations on the regulation of the anti-takeover clauses of the articles of association of listed companies in China.It is recommended that the anti-takeover legislation be improved in the overall context.Specifically,the model texts for anti-takeover clauses can be set up in laws and regulations,and the supervisory organs for anti-takeover clauses can be established,and require to fully disclose anti-acquisition related information.