Studies In The Regulation Of Corporate Takeover Defenses

Obviously, takeover defenses will restrain M&A between companies. Conflictions of interests among different participants occur when a target company adopts takeover defense to fight back hostile takeovers, whether the hostile takeovers have happened or will happen in the future. The legislature, watchdogs and courts should response to the battles of interests involved according to the principle of giving attention to efficiency as well as fairness. A balance should be stricken in order to settle the conflictions properly.In order to perfect the legal regulation of takeover defenses in China, the article has reviewed the recent developments of takeover defenses in China and referred to Chinese and overseas research resources in this area. The whole article includes seven chapters apart from introduction and conclusion.Chapter one summarizes the history and status quo of takeover defenses and the regulation in China, analyzes new environments of takeover defenses and new tasks of the regulation. The aim is to provide backgrounds and basis for the whole research.Chapter two reviews the developments of regulations of takeover defenses in developed or emerging capital markets, including US, UK, EU, Japan, and India. The chapter introduces history and essences of the legislations and precedents in these markets as well as the direction and revelation. The aim is to provide a complete frame of reference for the researchs of regulation in China.Chapter three studies the academic arguments concerning the value of takeover defenses and hostile takeovers, analyzes the tropism of regulation in the four markets, and concludes that China should regulate takeover defenses with the standpoint of "moderate strict restrictions" basing on its practical complexion and intent of policies.Chapter four sums up and construes the "shareholder choice" and the "board discretion" arguments about who should have the decision-making right over takeover defenses, the shareholders or the board of directors of the target company, and studies the two different modes on this issue in practice, the US mode of board discretion and the UK mode of shareholder choice. The chapter concludes that China should adopt shareholder choice mode basing on its theory and practice of company law, corporate governance environment, and legal environment, etc.Chapter five reviews theories concerning the duty of target company board in the context of takeover defenses, analyzes the legislations and precedents about the duty of the target company board in US, UK, and EU law, and points out the duty of fiduciary and the duty of care of the target company board in the context of takeover defenses in China, as well as the burden of proof in such cases.Chapter six compares two modes in the regulation of takeover defenses, the UK mode of self-regulatory system by the Panel on Takeovers and Mergers and the US mode of judiciary regulatory system by courts, especially the Delaware courts, and suggests that a integrative regulatory system should be established in China, that is, the integrative regulation by China Securities Regulatory Commission (CSRC), the Chinese M&A panel, and the courts.Chapter seven divides the measures of takeover defenses into four category and twenty five items, and discusses separately their applicability under Chinese law.Lastly, the article gathers the above conclusions and make the overall suggestion of perfecting the legal regulation of corporate takeover defenses in China.