The Study On Anti-takeover Provisions In Articles Of Association Of The Listed Company

With the development of securities market in China,the competition for the controlling right of listed companies becomes more and more frequent,and the hostile takeover gradually increases.In order to defense or defeat hostile takeovers,listed companies usually adopt various anti-takeover measures,including anti-takeover provisions in the articles of association,which are intended to defense or defeat hostile takeovers.However,the overemphasis on the anti-takeover effect might be detrimental to shareholders' rights and the public interests.Therefore,it is necessary to analyze the validity and application of anti-takeover provisions in articles of association in the basis of legal provisions,to reveal the existing problems,and to put forward some suggestions for improvement.This paper is divided into three parts:introduction,text and conclusion,and the main body will discuss this question with four parts as follows:The first part elaborates how listed companies use articles of association as a defensive measure to deal with the hostile takeover.Based on related concepts,this part explains the listed companies' motivations why they are willing to stipulate anti-takeover provisions in the articles of association.In other words,in the premise of the autonomy of provisions,articles of association itself has the function of defense and other anti-takeover measures may also work with the empowerment of articles of association.In addition,this part also discusses the practice of foreign listed companies how to stipulate anti-takeover provisions and draws lessons from the foreign laws about regulating the listed company's application.In the second part,the article attempts to classify the anti-takeover provisions and discusses its validity.With the analysis of articles of association or the amendments of the listed companies which are required to give an explanation by stock exchange about why they revise the articles of association,those provisions can be classified into four categories:improving standard of exercising shareholders' rights,maintaining the controlling rights of the board,restricting the acquiring enterprise's rights,and increasing the cost and difficulty of takeover.Meanwhile,this part also tries to put forward some standards and analyze the validity of anti-takeover articles with those standards.The third part discusses and analyzes the application of the anti-takeover provisions in the articles of association of listed companies from the perspective of the subject and process of application.As a matter of fact,general meeting of shareholders and the board of directors are the main subjects of application.And the application process consists of pre-prevention,middle-response,and post-disposal three stages.In addition,this part also emphasizes the controlling shareholders' fiduciary duty and directors' duty of loyalty when the subjects apply the anti-takeover provisions.In the fourth part,there are several suggestions about the existing problems in practice.Specifically,the first one is the improvement of legal system about takeover and anti-takeover:improving current law hierarchy,defining the ownership of the anti-takeover decision,and strengthening related subjects' obligations in the application.Secondly,exerting and strengthening the functions of industry self-discipline supervision and administrative supervision will promote the perfection of the regulation modes of the listed company's articles of association.Lastly,it is significant to improve the remedy system of defects of the articles of association,from the aspects of self-reservation,administrative relief and judicial relief.