Study On The Supervision Of Corporative Management Buy-out (MBO) In China

Due to the nonstandard laws and regulations, and the insufficient supervisions, Management Buy-out could not exert its system value in practice in our country. Based on this understanding, from the perspective of supervision and regulatory, this dissertation provides in-depth analysis into the main 5 issues faced by Chinese enterprises in their MBO practices, using the theories of Economics, Management and Law: main bodies of acquisitions, acquisition pricing, acquisition financing, the disclosure of information, and the protections for the interests of small shareholders. It also deals with the obstacles caused by relating laws and regulations, their causes, and the corresponding countermeasures. The main contents of the paper include:In the acquisition process, it is essential for the supervision bodies to determine the nature of management bodies in the maximum way, and to prohibit the entry of the management body whose purpose is to transfer wealth. Based on this understanding, this paper discusses about the capacity to choose the management body that is capable to enhance the efficiency of enterprises, through the establishment of the pricing system regarding human capitals of entrepreneurs; and also about the establishment of a separation mechanism to distinguish the nature of management body, through the effective separation signal of'net rate of return'.The core of MBO, as a deal of'control market', is pricing. By integrating the value-based assessment methods, this paper overcomes the shortcomings of a single assessment method, and establishes an enterprise value assessment system that covers enterprise assets values, market values and return values. On the other hand, enhance supervisions from the aspects of MBO pricing laws and regulations. The main approach is to improve the relating laws and regulations, use the methods of the advanced countries as references, introduce the bidding system, and facilitate the openness and transparency in MBO pricing process through a competitive bidding system.The solutions to the issue of MBO financing require the removal of legal obstacles. Under the guiding principles of protecting the rightful financial activities and avoiding financial risks at the same time, it is recommended to amend, modify and improve the laws and regulations concerned. Meanwhile, encourage the investors to participate in MBO, especially the use of trust mechanisms.Due to the asymmetric information and the interests of management bodies, the abuses against the legitimate interests of small shareholders and workers may take place. To protect their interests, the vote avoidance system should be adopted; expand the scope of main shareholders, and find solutions to the issue of resettlements and compensations of employees; strengthen the supervisions of MBO and enforce the penalties regarding the management bodies that violate the interests of small shareholders.About strengthening the disclosure obligation of MBO information: establish a supervision system for the information disclosures, give full play to the supervisory role and power of independent directors and public opinions, enforce the independent status of intermediaries, strictly execute the laws, and regulate the information disclosure act.Finally, based on the review and analysis into the laws and regulations home and abroad regarding MBO, this paper comments on the adjustments of MBO legal systems in China, and proposes the corresponding suggestions.