Research On The Legal System Of China's Stock-for-Stock Merger & Acquisition

Stock-for-stock M&A not only has a saving effect on transaction cost compared to cash payment, but also can avoid tax and increase share growth expectation from financial prospect. Consequently, as the international financial environment being more flexible since 1990s, especially the development of trade freedom on financial service, Stock-for-stock M&A has been becoming a popular form of Mergers & Acquisitions (M&A). Though Stock-for-stock M&A in China has only a short history of 11 years , we still believe that it is important to study Stock-for-stock M&A in China at present. The "Regulations on the Takeover of Listed Companies" promulgated on September 2002, made the Stock-for-stock M&A a legal form of M&A and the accomplishment of the Equity Division Reform eliminated the obstacle that the exchange ratio can not be determined. It means that Stock-for-stock M&A is coming into mercerization operation stage. In this paper,emphasis is paid on stock swap's characteristic of legal conduct. the acquisition of the Convertible legal relationship is extensive,and this is inexhaustible.therefore, only some of these legal issues are chosen and discussed in this paper.The legal system of stock-for-stock M&A is full of vitality and with a prosperous future and that is the aim and importance of this paper.The paper includes four chapters:The first chapter has three parts,the former two parts give general description of the stock-for-stock M&A, including its concept,characteristics,classification and convertible acquisition motives. Part III gives the overall analysis and evaluation for the century history of the stock-for-stock M&A development,and briefly recalls the history of the stock-for-stock M&A development in our country.Based on chapter one,the second chapter focuses on the principal legal issues that relate to the stock-for-stock M&A. The first part of this chapter gives the convertible ratio legal analysis,general discuss the legal issues of Convertible ratio,Analyses the exiting problems to decide the stock-for-stock proportion in the Chinese legal environment. Part II analyses the two forms of stock swap form:stock shares and additional directional,and puts forward the author's own recommendations. Part III is about protecting the interests of the shareholders in the process of the stock-for-stock M&A.The third chapter is gives the introduction and assessment about the stock-for-stock M&A in Western countries,analyzes the characteristics of their legislation,and focuses on the triangular merger system.The fourth chapter is about the legal norms of the stock-for-stock M&A and legislative thinking in our country,which is based on resolving the legal issues in the second chapter.The first and second Part of this chapter Part II introduces the law of stock-for-stock M&A in our country;affirming its legal rationality and analyzes its shortage.Part III,the author gives his own thinking about the stock-for-stock M&A in our country,and puts forward his own opinions and the corresponding legislative proposals.Based on the above discussion,we believe that our acquisition of the convertible should make positive trend accordingly,not only gives the implementation regulations,but also improves the relevant provisions in the "Company Law"and"Securities Act",It can be a very good solution to the Convertible acquisition by the emergence of some legal issues.