Study On Hostile Takeover And Its Legal Regulations

Hostile Takeover means that the purchaser attains the power to control the target company, by buying a certain portion of stocks from the shareholders of the target company in the public stock market, in the circumstances that the managers and boards do not know or they disagree with the takeover plan. As the result and the form of the tender offer, hostile takeover promoted the courses of the company merge greatly and brought very important influences to the operation of the company, also to the judicial administrations of some relative cases, which came from America in 1970s.The first part of my thesis focuses on the analysis of the concept of hostile takeover, its character and value. Hostile takeover is another form of company merge, comparing with the takeover by agreement, it aims at substituting the shareholder's status in the target company, by attaining their stocks without being known by the managers of the target company, and the result is the transfer of the beneficial ownership. Hostile takeover has its bright character. Usually, the target company adopts several measures to resist the purchasing of another party, which maybe do harm to the benefit of the shareholders; the aim of hostile takeover is not only going to strengthen its status in market, but also going to attain more profits through selling the target company; when the purchaser is executing the hostile takeover plan, they often buys the stocks through facing the minor shareholders straight, which do not control the company, instead of negotiating with the controllers(major shareholders or company boards) of the target company. I think hostile takeover is a civil activity, which functions have two facets: on the one hand, it can accelerates the flow of the market essential factors and it will at same time no doubt aggravates the turbulent of the market, on the other hand.The second part of my thesis focuses on the basic principles and operating ways of hostile takeover. Traditionally we have equal system,disclosure system, and protection to the middle and minor shareholders system. But I think it should conclude another one---public advantage system, because purchasing is a kind of activity which is concerned with a lot of parties, besides the benefits of the shareholders and managers, there are also other benefits belonging to the employees in the target company, claimants, consumers, communities, etc. furthermore, it has many effects on the society when the purchasing was successfully executed. So, we have to consider how to protect the public advantage in our society, and carry out the principles carefully mentioned above. Moreover, the thesis introduces three ways of hostile takeover: tender offer, entrusting offer and adding the portion of stocks holding by artificial personsThe third part is the emphasis in my thesis, which discusses the establishment of the anti-purchasing system in the target company. First, I think so long as there existed the hostile takeover, then it should be not only necessary but also certainly for the target company to take some measures in order to resist the purchasing. But it should be limited within a reasonable range. In the practice, the target company usually have these ways: stimulating super-majority provision clause, fair price clause, staggered board election clause and cumulative voting clause etc, in company procedures or through some contracts, for example, golden parachutes and white knight to defense the hostile takeover. There is also a new way called MBO (Management Buy-Outs) can be seen as an effective way to do so. Second, let us see the theory foundation of the anti-purchasing system. It means that what kind of functions does hostile takeover have? Say in another word, what kind of functions does hostile takeover have toward corporate governance, which is the core that some scholars dispute intensely. There are different theory foundations according to different corporate governance patterns. To our country the author suggest that it should adopt the pattern, which is simila...