| Management Buyout (MBO) is an legal act that the company's management staff purchase the company's shares for the purpose of changing the company's ownership structure and controlling the company ,through their own funds , large external debts and equity financing. It first appeared in the 1970's UK, and later it becomes an important form of mergers and acquisitions in the UK and the America. Although the rise of management buyouts in China is not long, but it is in rapid development in the particular context of the property right reform of China's state-owned companies.However, the theory of MBO has yet to be thorough, and the construction of relevant legal and regulatory system is not perfect,which results in the process of MBO of listed companies being faced with many difficulties, affecting the further development of this kind of acquisitions in China. Therefore, this article from the legal point of view, by comparison analysis and empirical analysis, discusses the development of the MBO of listed companies in China and the legal issues encountered, and put forward the relevant legal advice.This specifically includes the following:The first part is the analysis of theoretical issues related to MBO.Mainly analyzes the legal relationship involved in MBO, the legal basis of MBO, and the need of MBO of listed companies for legal regulation.The second part is the investigation about legal supervision conditions of MBO of listed companies between China and other countries.First, investigate the the development profiles of MBO in UK and the America, and summarize specific measures of legal regulation about MBO of listed companies in UK and the America from the angle of the Company Law and the Securities Law.Second, investigate the practice of MBO of listed companies in our country, and point out the differences of MBO of listed companies between China and other countries like the UK and the America.Finally analyse the existing legislation of MBO of listed companies in our country.The third part is the focus of this paper mainly discussing the legal problems encountered in MBO in China .Specifically: the problems in the purchasing subject including the problems which the purchasing subject encounters in the name of natural persons, or committee of shareholding employees, or Paper Company, or trust company; the financing problems including the problems in the bank loans, private lending, and trust financing; the price problems of transferring of state-owned assets, showing the damage to the interests of other investors and the loss of state-owned assets; the problems of information disclosure, showing that the important information is not disclosed or lack of timely disclosure and transparency.The fourth part also is the focus of this article, mainly giving some advices to legal supervision conditions of MBO of listed companies in our country. In this section, I first propose the basic principles of legal supervision conditions of MBO of listed companies in our country. Next, for the legal issues discussed in third part I put forward some legal advice. For the legal issues of purchasing subject, I believe that the scope of purchasing subject should be limited. On one hand, the senior management personnel,state-owned companies involved in MBO should be limited; on the other hand, to encourage as many competitors as possible to enter the auction market. For financing issues, I suggest that by means of optimizing the financing system to resolve it, including the relaxation of restrictions on use of bank loans in order to allow the management to use bank loans for equity investments; building diverse financing mechanisms; establishing and improving the MBO financing existing mechanisms. For the state-owned assets transferring price issues, I think we should follow the principles established in the State-owned Assets Law to establish a market price discovery mechanism, with the establishment of the purchase price through a public bidding and the function of property rights trading market, and improve the state-owned assets supervision system. For information disclosure issues, by means of the function of independent directors, mandatory disclosure of the acquisition price and the source of funding, increasing disclosure of information on repayment, and severe penalties for violations. |
