The Legal Issues Of Acquisition Of Listed Companies In China

The acquisition of the listed company is one important method of the assetrestructuring and property transaction. The acquisition facilitates the efficiency ofresource and assets allocation. Therefore, countries all over the world attach greatimportance to such security exchanges. Since the Shenzhen Boan Company acquiredthe Shanghai Yanzhong Company through Shanghai Securing Exchange, the numberand the scale of acquisitions have increased rapidly in China. Although, the legislativebranches of China have implemented the relevant law and regulation, there are still alot of problems in the corporate takeovers. The most prominent problem is theinterests of minority shareholders can not get fully protected. Damage to the interestsof the minority shareholders would have hindered the enthusiasm of the smallinvestors. The investment of minority shareholders is the foundation of the listedcompanies and the impellent power of the stock market healthy development. So theprotection of the interests of minority shareholders is very important. As this principle,the author mainly utilizes the approach of comparative analysis combined with thenormative analysis and case study to analysis this problem in the acquisition processof Chinese listed company.This article includes introduction, body and conclusion. There are four chaptersof the main body. Chapter I is the basic theory of the protection of the interest of minority shareholders. The author firstly describes the concept of takeover of listedcompanies and the concept of minority shareholders. Then the author analyses andpoints out the reasons why the interests of minority shareholders are always damaged.Such as, the irrational shareholding structure of Chinese companies, the status of thetarget company not equals the acquiring firm, the status of the minority shareholdersnot equal the controlling shareholders, and legal remedy channels not perfect.Chapter II is the analysis of the current Chinese legislation for minorityshareholders’ protection. The author analyses the legislation of the tender offer system,the legislation of the anti-takeover, the legislation of the obligation of controllingshareholder and director, the legislation of the information disclosure system and thelegislation of the litigation of shareholder. Then, the author points out the legislativegaps of these five important systems.The Chapter III, the author compares the legislative practices of minorityshareholders protection in the USA, the Britain and Hong Kong. Through thecomparison, the referential experience can help to accomplish Chinese law andlegislation.In Chapter IV, the author suggests to establish a comprehensive system toprotect the minority shareholders. Against the gaps mentioned in Chapter II and basedon the referential practices, the author gives the advices how to improve the legalsystems. Through completing the trigger conditions of mandatory offer, the exemptionprovision of the obligation and the expiration terms of acceptance, to improve thetender offer system. Through the strategy of leaning on the minority shareholders,clarifying the anti-takeover measures and accomplishing the corporate governancestructure, to improve the anti-takeover system. Through increasing the methods of thedisclosure of acquisition information and the punishment measures against the insiderdealing, to improve the information disclosure system.