A Study On The Legality Standard Of Anti-Takeover Measures Of Listed Companies

Since 1993,there have been two waves of hostile takeover in China.The first wave was set off by the first case of hostile takeover,"baoyan wave",and the second wave was represented by the "baowan dispute" case in 2015.In order to resist the hostile takeover,the target company takes a variety of anti-takeover measures,such as setting anti-takeover clauses in the company's articles of association in advance,looking for the "white knight" in matters,and adopting scorched earth tactics.However,due to the lack of anti-takeover rules in China's current legislation,the theoretical and practical circles have been disputing the legality of anti-takeover measures,and no consensus has been reached.America's most effective anti-takeover measures have little room for survival in China.In this article,based on the existing laws and regulations,presenting author's view on the legitimacy of some typical anti-takeover measures.It mainly draws on the judicial review standard of anti-takeover measures established by American court,summing up the basic principles that China's anti-takeover measures should follow,including maximization of shareholders' interests,full disclosure of information and prohibition of abuse of rights.Specifically,it can be judged according to whether it violates the mandatory provisions of law and the standard of directors' fiduciary duty.Finally,some suggestions are put forward to introduce the authorized capital system and construct the class share system.The first part of the article explores why listed companies reverse takeover.Starting from the basic concepts of acquisition,anti-takeover and hostile takeover of listed companies,then introducing the advantages and disadvantages of a hostile takeover and the different attitudes towards the anti-takeover right of target companies.The second part first expounds the necessity of examining the legality of anti-takeover measures,and then analyzes the legality of some typical anti-takeover measures according to the existing laws and regulations.It is considered that the supermajority provision and golden parachute in the articles of association of the company are legitimate,but attention should be paid to the problems that may arise in its application.However,the provisions of the restriction of shareholder's proposal right and staggered board violate the mandatory provisions of the law and are not legal.The terms of the poison pill plan have no place under the statutory capital system,and whether the scorched earth tactics of selling the crown jewels are legal or not depends on the specific transaction price.The third part mainly introduces the anti-takeover position of the United States,the judicial review standard of the anti-takeover measures established by the case law,and the anti-takeover legislative arrangement of the United Kingdom,Germany and France.The fourth part clarifies the basic principles that China's anti-takeover measures should follow,including maximization of shareholders' interests,full disclosure of information and prohibition of abuse of rights.In a case,the judgment can be made according to whether the law is violated or not,and whether directors' fiduciary duties are violated.In order to lay the institutional foundation for the anti-takeover measures that the board of directors intends to adopt but have no living space,China also needs to introduce the authorized capital system and construct the category share system in the process of company law reform.