Analysis Of The Validity Of Anti-Takeover Provision In The Articles Of The Listed Companies

With the increasing number of malicious acquisitions in China's securities market,the number of listed companies adopting anti-takeover is also increasing rapidly.Many listed companies with relatively scattered equity structure begin to revise their charters and add various anti-takeover provision.The anti-takeover provision is a provision set by the acquired company in the company's articles to increase the difficulty of acquisition so as to resist the malicious acquisition.As the legal system for the regulation of anti-takeover provision has not been established in China,it leads to the phenomenon that the anti-takeover provision in practice are varied and mixed.There are many existing suspicions as follows: the interests of small and medium-sized shareholders are damaged;the directors,supervisors,and other management are protected excessively;the listed company's well-intentioned acquisition is improperly hindered.Under this circumstance,it requires to clearly set up the followed principles in the anti-takeover provision,and analyze the effectiveness of the anti-takeover provision within the current China's legal framework.Firstly,it can serve as a future reference for improving relevant laws;secondly,it can guide the listed company's anti-takeover practice.According to different main bodies of action,the anti-takeover provision of China's listed companies are divided into two categories: “Limiting Shareholders' Rights” and “Controlling the Board of Directors”.This thesis conducts the research with the focus on the effectiveness of the common provisions in these two categories.The current problem at this stage is that the validity of the law is doubtful because the law has very little provisions on the anti-takeover provision of the charter.As a "constitution of the company",the company's charter have certain autonomy,which gives the creators a certain will.It not only regulates the internal affairs of the company,but also relates to the most basic rules of the company's operations as well as the company's internal power allocation.It is endowed the highest position of the company's internal rules by the law.The Company Law is a group law in essence.Because its normative behavior involves the interests of others,it is necessary to weigh all kinds of interests,and exercise the autonomy of the charter within certain limits.The anti-takeover provision is the content of the company's charter,whose autonomy should also be carried out within the legal boundaries.No company can resist statutory obligations because of contractual provisions.Therefore,the anti-takeover provision in the listed company's charter must attach great importance to the restrictions set by them,which are reflected in the prohibition to break through the boundaries of the company's charter autonomy,including the prohibition to unduly restrict the rights of shareholders(especially the rights of small and medium-sized shareholders),and the prohibition to infringe the interests of stakeholders.Therefore,on the basis of this,this thesis makes the principles to be followed in setting up the charter's anti-takeover provision according to the legislative spirit and basic principles of Companies Law of the People's Republic of China as well as the policy orientation of China's acquisition behavior.These are embodied as follows: the content-legality principle(anyone cannot violate the peremptory norms of the law and the principle of protecting the rights and interests of shareholders),the subject-legality principle(the principle of faithfulness and diligence from the management of the acquired company),and the procedure-legality principle.According to the statistics of the anti-takeover provision of nearly 2,000 listed companies in the main board market of China's Shanghai and Shenzhen stock markets,four types of anti-takeover provision most commonly used by listed companies in China are as follows: the provision of absolute majority voting,the provision of restricting shareholders' proposals,the provision of misplacing board of directors,and the provision of restricting directors' qualifications.After an empirical analysis on the anti-takeover effects of these four types of anti-takeover provision in practice,it is known that their resilience to malicious acquisitions is good.Then,after analyzing the legal effects of the above four types of anti-takeover provision in combination with the principles to be followed in setting up the anti-takeover provision,this thesis draws the conclusion as follows: the provision of restricting shareholders' proposal is invalid because it violates the principles of legal compulsory norms and the principle of equity equality.Except it,the effect of the other three categories of provisions is generally affirmable.However,it still needs to conclude according to the actual situation of the specific case study.Finally,this thesis puts forward four more macro-recommendations on the regulation of anti-takeover of the listed company's charter,including suggesting to clarify the principle of setting the anti-takeover provision in the charter,formulating the model text of the anti-takeover provision,perfecting the system of voting rights from the shareholders' meeting to protect the shareholders' interests,and perfecting the review system for the anti-takeover provision.This thesis hopes to provide some mentalities for the regulation and supervision of the anti-takeover provision of the charter by China's laws and related departments.