Research On The Legal Issues Of Anti-takeover Taken By The Board Of The Target Company

Anti-takeover are measures taken by the target company to defeat takeover actions toward it, especially in the case of a hostile takeover take place. The directors of the target company are always in a conflict of interest with the shock holders and the company in the process of anti-takeover. They could consider their own interest and the interest of the company at the same time. So the power of the directors may be abused and the interest of shareholders and the company may be affected. In fact, the directors always have something to do in anti-takeover in any country. But their legislations are different on how to allocate the power between the target company's board of directors and shareholders. And the legislations are different in different country.Fiduciary duty of directors is a legal means to guarantee the interests of investors under a company system in which the ownership and management right is separated. Company Laws in America and Britain give the directors the power to the company's management and operation of the business. The power can be used for the interest of the company. In order to prevent abusing of that power, the directors must perform their statutory obligations. From the performance of fiduciary duty of the directors, the existence of power abusing can be recognized.To solve the problem on conflict of interest issues, legislation in America, Britain and the European Union have different designs. In Britain, anti-takeover was decided by the shareholders'assembly. Though the directors are restrained by the shareholders'assembly .In American, anti-takeover was decided by the directors. The directors have more power in anti-takeover than directors in a British company. In order to regulate the directors better, some abstract requirements of fiduciary duty were formed in case law.Theory and legislative practice in America and Britain have accepted that the directors of the target company are always in a conflict of interest with the shock holders and the company in the process of anti-takeover. Britain and American use fiduciary duty to rule the directors, though they are different in anti-takeover deciding Mechanism.To sum up, though there are differences between the legislations of the American model and the British model, both of them conform that the directors are in the conflict of the interest of themselves and the interest of the target company and the shareholders. And the two models design system different to deal with the problem that the power of the directors may be abused. Though the system in America and Britain are different, fiduciary duty and its judicial review standards are contained in the system both of them. So the two models achieve the same goal with methods different.Anti-takeover legislation in China includes rules contained in the legal system and administrative regulations, and administrative regulations and self-discipline. Anti-take is just referred in most of the rules. The law governs the activities of anti-takeover is mainly relied on the"The Regulations of Acquisitions and Administrations of Listing Company", which is promulgated and executed by the China's Securities Regulatory Commissions (CSRC) in 2006.Though the anti-takeover legislation is rich in China, the content of the anti-takeover legislation is very barren. First, the power of the directors in the target company should be clearly defined. By comparing the differences between the fiduciary duty in China and Britain, some anti-takeover measures can be taken by the directors should be list clearly in law, for example, the right to persuade shareholders accept anti-takeover. Second, the fiduciary duty of the directors in the target company should be specified. By comparing the obligations of the directors of the target company in Britain and America, we find that the American legislation on fiduciary duty is more suitable for us to learn from. The duty of care of directors of the target company should be detailed. Third, the judicial review mechanism on directors` fiduciary duty should be build. The foreign review standards have certain shortcomings, and are difficult to adapt to China's legal environment.So we should design a standard with substantive rules and procedural rules of to review the performance of the directors of the target company. The procedural rules should let the directors provide proof to support their decision. The substantive rules should include four elements. They are necessity, proportionality, adequacy and independence. If the anti-takeover measures carried out by the directors comply with the requirements above, the measures is legitimate, and should be protected by law. Or else, the measures should be revoked, and directors of the target company should be held responsible.