The Study On The Legal Regulation Of Listed Companies Setting Up Anti-takeover Provisions In The Articles Of Association

In recent years,there have been many battles between takeover and anti-takeover in capital market of China.For example,Baoneng Group Company acquired Vanke Co.,Ltd,Kainan Co.,Ltd acquired Xinmei Real Estate Co.,Ltd and Sunshine Insurance Company acquired Yili Corporation.All had a certain shock to the capital market.In order to reduce the likelihood of being hostilely acquired,a lot of listed companies whose equity structures are relatively decentralized have revised the articles of association one after another.They have introduced anti-takeover clauses such as “restricting shareholders’ rights to replace and re-elect directors”,“golden parachute”,“restricting shareholders’ rights to nominate directors,” and “super majority consent”.They attempt to increase the acquisition cost of hostile acquirers or increase the difficulty of hostile bidders to control the company,so that they can resist the invasion of hostile bidders.Although corporate autonomy gives the companies freedom to set anti-takeover clauses in constitutions,freedom should be limited by legal compliance and protection of all parties’ interests.Judging from the current anti-takeover legal system,the legality of setting up anti-takeover clauses in the articles of association of listedcompanies is vague.Although China Securities Regulatory Commission has issued follow-up letters and inquiries to the listed companies who set up anti-takeover clauses,the supervision is not enough.Many listed companies still set up anti-takeover clauses that are likely to violate the law after feedback the letters.These clauses have already played a role in anti-takeover,which has hindered the order of the capital market.In view of this,the article intends to study the legality of anti-takeover clauses.The article refers to the extraterritorial legislative experience and combines it with China’s current legislative status.It analyzes the regulatory methods of listed companies setting up anti-takeover clauses in the articles of association.In addition to the introduction,the main body of this article includes the text and conclusion.The main body is divided into four chapters.The first chapter provides an overview of the anti-takeover and anti-takeover provisions.In order to resist hostile takeovers,target companies often use various types of anti-takeover measures to reduce the attractiveness of companies.Setting up the anti-takeover clauses is one of the common anti-takeover measures.The first section defines the anti-acquisition,analyzes the reasons for its formation,and expounds the two voices in support of and opposition to anti-takeover.In the second section,the statistics of various anti-takeover provisions set out in the articles of association of the 15 listed companies from May 1,2016 to December 31,2017 were collected.The most typical and common anti-takeover clauses in the constitutions of the listed companies are selected.The article tries to study meaning,common types and effects of these provisions.The article also discloses the regulatory dilemma that regulatory authorities are faced with in reality.The second chapter analyzes the principles of judging the validity of anti-takeover clauses.First,the author analyzes the limits of theautonomy of formulation and revision of constitutions from the nature of the constitutions.The freedom of revising the articles of association shall be limited in different contents depending on the stage of revising constitutions,the nature of the constitutions and the obligations of directors involved.Second,it summarizes the principles of the legality of anti-takeover clauses.As part of the constitution,the anti-takeover clauses should also be restricted.This restriction is the requirement for the legality of the terms,including whether it meets the principles of mandatory norms,the principle of protecting shareholders’ rights,the principle of the directors’ obligations of loyalty and diligence,and the principle of taking into account the public interests.Finally,I examine the legality of judgment on the terms of anti-takeovers in United States America and England.In United States,it advocates corporate autonomy.Directors are believed to be in good faith,but they must be bound by the principle of commercial judgment.The case law of the United Kingdom imposes requirements on directors’ duty of care and fidelity.The third chapter analyzes the legitimacy of anti-takeover clauses one-by-one using the principles of the legality of anti-takeover clauses.Clauses restricting shareholders’ right to replace and re-elect the directors restrict shareholders’ right,thus it lacks legitimacy.The golden parachute clauses are legally designed,but the key is how to design the amount of compensation in a reasonable range.Clauses restricting shareholders’ rights to nominate directors in the reasonable range should be recognized.The super majority clause will directly limit the rights of hostile bidders to express their will and should be deemed illegal.The fourth chapter talks about the regulations and suggestions for setting up anti-takeover clauses in constitutions in China.First,I summarize the rules and regulations about anti-takeover clauses in "Company Law","Securities Law","Management measures for theacquisition of listed companies","Guidelines for the articles of association of the listed companies",and "Rules of shareholders meeting of the listed companies".The article analyzes the defects and loopholes in the current legal system.Second,it gives some suggestions to set up anti-takeover clauses in articles of association in China.It is expected to construct a system of general rules for anti-takeover clauses in combination with enumerated lists,strengthen the supervision over the formulation of anti-takeover provisions and establish a protection system for minority shareholders’ interests.It is hoped that these proposals will provide references for the legal regulation of anti-takeover provisions in the future.The conclusion part summarizes the key points of the full text.