A Study On The Legal System Of Poison Pill In The Acquisitions

With the continuous maturity of Chinese capital market,the majority of enterprises have taken the corporate acquisition as the main way to expand business scope and achieve investment returns,which also promotes the rapid development of corporate acquisition system.In an increasingly active acquisition,the target companies are more likely to face the threat of a hostile takeover.In order to promote the real value of the company,shareholders or boards should be allowed to adopt anti-takeover measures.Poison Pill is one of the most effective anti-takeover measures in the mature capital market.Therefore,this paper selects the Poison Pill as the research object.However,the Poison Pill in the practice is a "double-edged sword",which has appeared in the United States acquisition market.Therefore,the main problem to be solved in this paper is to study the rationality of the Poison Pill and the feasibility of the implementation of the acquisition market in China through the legal and economic analysis of the Poison Pill,so as to construct the Poison Pill legal system suitable for Chinese capital market.This paper is divided into six parts:The first part is an overview of the legal system of company acquisition.Firstly,combined with merge concept,the paper clearly defines the corporate acquisition behaviors and introduces its legal characteristics and legal form.Secondly,the definition of anti-takeover behavior of the company and its specific model will be listed.Finally,the analysis of Chinese active market,the clarification of hostile takeover and anti-takeover trend,the illustration of the deficiency anti-takeover legal system(e.g.,the Poison Pill)will be showed.The second part is the review and introduction of the Poison Pill system origin and basic concepts.Firstly,the origin of the Poison Pill system is summarized and classified by its evolution process.Secondly,on the basis of previous development and classification of the pill,the concept of Poison Pill is defined and the legal characteristics the Poison Pill system are summarize.Finally,it analyzes the legal structure of the Poison Pill and clarifies the rights,obligations and responsibilities of the board of directors,shareholders and shareholders' general meeting.The third part is a typical case analysis of the main types of the state of Delaware law program.Firstly,the Convertible Preferred Stock Pill is introduced to study the behavioral patterns and the legality of such Poison Pill,based on the National Education Corporation v.Bell & Howell Co.Case.Secondly,the Stock Purchase pill is introduced.The Flip-Over pill,the Flip-In Pill,the Back-End pill program,three parts of the program,are expounded and used to analyze the case of Moran v.Household International,Inc,Desert Partners,L.P.v.USG and Corp.and Revlon,Inc.v.MacAndrews,focusing on behavior patterns,justification and legal basis.Thirdly,it introduces the Poison Pill,which focuses on protecting the self-interest of the board,including the Dead Hand Pill and the Slow Hand Poison Pill.Two cases of Carmody v.Toll Brothers,Inc.and Quickturn Design System,Inc.v.Mentor Graphics Co.are used to demonstrate their legitimacy.Finally,combined with the above typical cases,The Delaware Court of Justice's judicial review standard towards the legitimacy of the Poison Pill.The fourth part is the economic analysis of law on the rationality of Poison Pill.Firstly,the Poison Pill is analyzed through the perspective of agency cost.It is clearly pointed out that taken the Poison Pill as a corporate acquisition defense measure relates to governing problems.Based on the theory of principal-agent,the underlying ex ante agency costs and ex post agency costs caused by the Poison Pill are probed.The empirical research data,gathered from the analysis of the poison plan,are used to manifest whether it increases the agency costs between shareholders and directors or protects shareholders' interests.The value effect of Poison Pill is demonstrated in this way.Next,the Poison Pill is considered from the point of the balanced perspective.The principal-agent theory limitations is put forward,based on the stakeholder theory and the Poison Pill of the board of directors.Maintain all the stakeholder's rights and interests,protect the interests of small shareholders,maximize the value of the company,or reduce to the tool of board of directors to seek private interests are the criteria to demonstrate the rationality of the Poison Pill.The fifth part analyses the feasibility of Poison Pill legal system in our country and tries to construct concrete legal system.Firstly,it introduces the legal framework of Chinese takeover market and the national policy on corporate takeover.It clarifies the possibility and necessity of Poison Pill project application in combination with the current market environment and anti-takeover legal regulation.Secondly,it is the construction of specific system content of Poison Pill.By comparing the decision-making model of the Meeting of Shareholders and the decision-making mode of the Board of Directors,it is recommended that the decision-making power of the Poison Pill be granted to the Board of Directors.Finally,it is the construction of the protection measures of the Poison Pill.It is proposed to set up an administrative relief system and litigation relief system to fill the damage that may do harms to shareholders or company due to the implementation of Poison Pill.The sixth part is the conclusion,which summarizes the main points of this paper.