Legal Research On Hostile Takeover Behavior Of Listed Companies In China

Accompanied by the accelerating integration pace of China’s capital market into the world,and the vigorous development of the market financial order,mergers and acquisitions between companies have become increasingly frequent,resulting in constant legal disputes.In practice,the main problems of hostile acquisitions are disputes on the acquirers’ qualifications,acquisition funds,and target companies’ management and etc..At present,China’s Corporation Law and Contract Law lack explicit regulations on hostile acquisitions,only the principle problems of acquisition of listed companies involved in the Measures for the Management of the Acquisition of Listed Companies.Therefore,our country currently lacks an overall framework for hostile acquisitions and the specific provisions is too sketchy without well consideration and details.In other words,from the perspective of Corporation Law actual practice,there is still an objective and practical need for a systematic study on the legal regulations of hostile acquisition.Baoneng Company used leverage funds to acquire China Vanke,a financial fraud infringing the rights and interests of target company,which brought enormous wealth to shareholders and at the same time,serious intrusion to the management,investors and “the stakeholders”.In general,the target company will actively respond to threats of hostile acquisition,including a series of defensive measures such as “shark repellent” and “poison pill plan”.In extreme cases,the company’s management will spare no expense to use scorched earth plan,burning the company to ground,which made the whole society have a new understanding of the importance of defensive behaviors on "hostile acquisition".The hostile takeover that arose from the upsurge of corporate mergers and acquisitions is more about the defensive measures established by management to prevent unpopular acquisitions.The impact of company controlling stakes competition will also extend to the minutiae of society.At the same time,equity competition challenges the court’s ability to handle acquisition disputes.The court needs to use commercial judgment rules to analyze the legitimacy of management’s defensive measures and to propose higher requirements on rules and regulations of hostile acquisition in Company Law,which will inevitably lead us into a new era of corporate acquisition management.This article is based on the dispute between Baoneng Company and Vanke,analyzing the causes of the hostile acquisition behavior and the causes of the different reflections of each party in the whole process.In response to the problems discovered,it puts forward shallow proposals at the end,so that the target company with disperse shares can make precautionary measures in advance when facing hostile acquisition.