The Relationship Between The Articles Of Association Adentment And Corporate Control Rights In Listed Companies

"Battle between Wan and Bao" is a milestone event in China's capital market from 2015 to 2017,causes lots of repercussions in society.After the "Battle between Wan and Bao",many listed companies amended their articles of association to prevent themselves from being maliciously acquired.Based on the "Battle between Wan and Bao",this paper studies the impact of the increase in the number and intensity of anti-merger and acquisition(anti-M&A)clauses on control rights.Firstly,this paper reviews the literature on anti-M&A strategy and corporate control,which is divided into two parts:one is the related research on control rights,including the definition of control rights,the separation of control rights and cash flow rights;the other is research on anti-M&A strategies,including the characteristics of target companies,the motivation of anti-M&A strategies,and the effects of individual strategies and combination strategies.Secondly,this paper calculates the degree of control rights and amendments to the articles of association.This paper uses probabilistic voting model to calculate the control rights of the first largest shareholder under general and special resolutions respectively.Anti-M&A statutes of sample companies which were increased consist of hierarchical board of directors,absolute majority clause,board retention,board qualification review,golden parachute clause and equity strategy,etc.In this paper,the number of anti-M&A clauses added in the sample companies is counted in detail,and the modification intensity and total modification intensity of the hierarchical board of directors,the board of directors'retention,the qualification examination of directors,the golden parachute clause are calculated.The study found that it's reasonable for 60%of the sample companies to add anti-M&A clauses.Their control rights of the largest shareholder are lower than the safety index.For the other 40%companies,the control rights are still within the security level.It is not necessary to add anti-M&A articles of association,which is called over-defensive.Over-defensive companies have the following characteristics:most of the companies are private enterprises,and the company achieved large-scale profits in that year,the profit is more than the same period in previous years;the largest shareholders are worried about their interests being divided up,increase anti-merger clauses,and enhance their control over the company.Thirdly,this paper explores the impact of the increase of anti-M&A clauses and the intensity of anti-M&A clauses on corporate control through empirical tests.The study finds that almost all the increase of anti-M&A clauses play a role in increasing the control rights of the company.The article of constitution of the hierarchical board of directors is the only one that has a significant relationship with the control rights under general resolutions and those under special resolutions.The golden parachute clause,the retention of board members and the increase of shareholding strategy clause are significantly related to the control rights under special resolutions,but not to those under general resolutions.The absolute majority clause and the qualification examination of directors are significantly related to the control rights under general resolutions,but not to those under special resolutions.This paper also explores the impact of the strength raise in board hierarchy,absolute majority clause,parachute strategy and board qualifications on corporate control.It is found that the strength of hierarchical board of directors strategic is significantly correlated with the control rights under special and general resolutions,the strength of parachute clauses is significantly related to control rights under special resolutions,the strength of absolute majority clause and directors' qualification clause have no significant relationship with the control rights under special and general resolutions.Finally,based on the above research,this paper puts forward some suggestions for companies that wish to resist "barbarian" invasion by amending their articles of association.For improving the control right of the first largest shareholder,the directors' hierarchical board clause is the most effective and widely used clause.The absolute majority clause,director qualification examination,board retention and equity strategy can increase the control rights of the largest shareholder.With the raise of the number and intensity of anti-M&A articles of association,the control rights of the largest shareholder under special resolutions will be increased.The topic of this paper is novel,and focuses on the hot topics that enterprises are now concerned about.With the continuous prosperity and development of the economy,market vitality increases,the market M&A and anti-M&A will increase day by day.It is hoped that the research results of this article can provide some references and suggestions for enterprises resisting the threat of M&A by amending their articles of association in the current market.