Research On Legal System Of Public To Private Transactions

The controlling shareholder of a listed company could make a tender offer tobuy all or most of the company’s publicly held shares or make the listed companymerge with or sell all of its assets to the controlling shareholder’s wholly ownedsubsidiary. After that the publicly held shares of the company will be less than theminimum standard of the listed company. Then the listed company has to bedelisted from the public securities market. This kind of transaction is called as“going private”. In the U.S. and Europe capital market there have been severalwaves of going private transaction. And nowadays, going private is one of themost important way for the listed company to delist from the open market. In thegoing private transactions, one side is the controlling shareholder, while the otherside is the minority shareholder. We should not ignore the nature inequalitybetween the two parties since the controlling shareholder is able to control thetransaction and enrich himself by seizing the minority shareholder’s interests.Therefore, it is very important to set a legislative system of going privatetransaction to protect the rights and interests of the minority shareholder andguarantee the efficiency of the transaction at the same time.For the past few years, there have been several going private transactions in ourcapital market. For the lack of the specific regulations on going private transactions inChina, controlling shareholders made use of the transactions to violate the rights and interests of the minority shareholders, which lead to negative influence on thedevelopment of securities exchange market.In the beginning, the thesis tries to give the definition of the going privatetransaction, and explains why controlling shareholders would like to delist the publiccompany. Then it illustrates the specific means of going private and analyzes theprotection of minority shareholders shall be different in variety of transaction means.In the second part, it deeply analyzes the going private transaction cases inChinese capital market, and illustrates the issues in the aforesaid transactions. Bypointing out the problems of the going private transactions in China, it reaches theconclusion that the way to solve the problem is to perfect the regulations on goingprivate transactions.In the third part, it invokes the legislative system of going private transactions inthe US, Germany and Hong Kong, to enlighten the improvement of going privateregulations in China.In the last part, the thesis put forwards some suggestions on the perfection of theregulations on going private transactions, such as the improvement of the independentdirectors, the perfection of the information disclosure and offering dissentientshareholders effective means of relief.