On The Risk Of Corporate Control Transfer In Hostile Takeover

Since the 40 th anniversary of reform and opening up,China's economy has developed rapidly and the capital market has continued to improve.Firstly,we completed the share-trading reform and the activity of M&A market has promoted.Secondly,listed companies' equity was increasingly dispersed,the shareholding ratio of the largest shareholder continued to decline and the number of listed companies without actual controllers continued to grow,reducing the difficulty of M&A activities.Finally,the scale of insurance assets has grown rapidly,it provides more adequate financial support for M&A activities.In recent years,China's capital market has set off a wave of mergers and acquisitions,and the control of listed companies has become more and more fierce.Among these,there are many cases of using hostile takeover to implement companies' control transfer.For example,the well-known “Baowan dispute” in 2015 and the “Aijian Group's control dispute” in 2017,these cases of control rights competition reflect the rapid development of China's capital market,and also reflect the awareness that listed companies in China resist hostile takeover and protect its control rights is weak,and the laws and regulations on the protection of control are lacking.In order to more accurately understand the control transfer risk caused by hostile takeover in China's listed companies,and propose a feasible and effective strategy to effectively evade control transfer risks,this paper selects representative Shanghai Aijian Group Co.,Ltd.(hereinafter referred to as “Aijian Group”)control rights competition to conduct case studies.First of all,this paper expounds the background and research significance of the topic,and analyzes lots of domestic and foreign relevant literatures on control transfer of companies.Secondly,this paper introduces the definition and characteristics of hostile takeover,control rights and control transfer,this paper also sorts out several important theoretical foundations related to control transfer,and explains the relationship between hostile takeover and control transfer.These two parts laid the foundation for the case analysis of the control transfer risk of Aijian Group.Thirdly,this paper carries out the analysis of the economic consequences and the risk identification of Aijian Group's control transfer,and analyzes the reasons for the formation of Aijian Group's control transfer risk from the perspective of the degree of equity dispersion and whether the stock price reasonably reflects the company's value.The research results show that under the circumstances that China still lacks laws and regulations such as the protection of control rights,Aijian Group has induced control transfer risk due to the high degree of equity dispersion,the fact that the stock price fails to reflect the company's value and the lack of company control rights protection clause.At the same time,this paper finds that a large number of equity-distributed listed companies in China have similar reasons for the risk of inducing control transfer.Finally,this paper based on the reasons of control transfer of the equity-distributed listed companies represented by Aijian Group proposes some feasible prevention and response strategies with establishing a reasonable shareholding structure,appropriately increasing the shareholding ratio of shareholders,improving the relevant company's protection clauses and state control rights,in order to provide a reference for the equity-distributed listed companies represented by Aijian Group to avoid control transfer risk and to achieve stable and sustainable development.In the course of the research,I find that the domestic research on control transfer mainly focuses on the two aspects of connotation and post-impact,while there are few studies on the risk of control transfer and associated it with hostile takeover for preventive measures.This paper analyzes the relationship between hostile takeover and the risk of control transfer,finds a typical case of control transfer of listed companies with equity decentralization,and compares and analyzes with other 10 listed companies in the same industry to explore ways to avoid the risk of control transfer.Therefore,the research content of this paper has certain innovation.At the same time,due to the lack of information available for reference,this paper must have some limitations.