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2021 | OriginalPaper | Chapter

On the Supply Side of Western Hostile Takeover Law and Its Implications for China

Authors : Ciyun Zhu, Linyao Tang

Published in: Takeover Law in the UK, the EU and China

Publisher: Springer International Publishing

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Abstract

The battle for corporate control may ultimately lead to the improvement of corporate governance, or the plunder of corporate wealth. The goal of hostile takeover regulation is to promote merit-adding takeovers while decreasing as much as possible the agency costs between corporate insiders and shareholders. Different practices in the US, the UK and the EU all have their merits and inadequacies. This research examines the western practices from a path dependence perspective, and offers insights for future Chinese hostile takeover legislation. For complex reasons and institutional factors, amendments to the law would be of little use in improving the hostile takeover regulations in China, and the main priority should be to discard the “CSRC centralism” dependency path that has been active for decades.
Footnotes
1
Fu (2017), p. 227.
 
2
See Demsetz and Lehn (1985), pp. 1155–1177. See also Jensen and Meckling (1976), pp. 305–360. See also Demsetz (1983), pp. 375–390.
 
3
Ventoruzzo (2006), p. 171.
 
4
See Carter et al. (2003), pp. 33–53.
 
5
Hoover and Roosevelt (1952).
 
6
See Benston (1973), pp. 132–155.
 
7
Hurst (2010), pp. 1–20.
 
8
See Ikenberry and Lakonishok (1993), pp. 405–435.
 
9
See Bebchuk (1982) pp. 23–50.
 
10
See Arsht and Stapleton (1967), p. 75.
 
11
See Nourse (1996), p. 1331.
 
12
Roe (1996), p. 3.
 
13
See Robert (2009), pp. 1–362.
 
14
See Benati (2004), pp. 691–717.
 
15
Id.
 
16
See Sheppard (2013).
 
17
Armour and Skeel (2006), p. 1739.
 
18
See Roberts (1992), pp. 183–200.
 
19
See Johnston (1980).
 
20
See Deakin et al. (2002).
 
21
Armour and Skeel (2006), p. 1769.
 
22
Id.
 
23
Linyao Tang (2017c), p. 129.
 
24
See Edwards (2004), pp. 416–439.
 
25
Armour and Skeel Jr (2006), p. 1763.
 
26
Hart (1992), p. 843.
 
27
See Sorkin (2010).
 
28
Keller and Gehlmann (1988), p. 329.
 
29
Brown (1970), p. 1637.
 
30
See Mitchell and Netter (1994), pp. 545–590.
 
31
See Steinmo (1994), pp. 9–17.
 
32
See Dong and Ozkan (2008), pp. 16–29. See also Khan (2006).
 
33
See Goergen and Renneboog (1998).
 
34
Armour and Skeel (2006), pp. 1760–1770.
 
35
Id.
 
36
See Deakin et al. (2002).
 
37
See Schneper and Guillén (2004), pp. 263–295.
 
38
Bainbridge (2005), p. 1735.
 
39
See Karpoff et al. (1996), pp. 365–395.
 
40
Armour and Skeel (2006), p. 1727.
 
41
See Michie (2012).
 
42
Tang (2017c), p. 113-197.
 
43
Tang (2017a), pp. 68–76.
 
44
See Bai et al. (2004), pp. 599–616. See also Cai (2012), p. 901.
 
45
Tang (2017c), p. 164.
 
46
2014 Company Law, Article 98.
 
47
Id, at Article 126. Some originally-born-in-China companies achieved the ownership structure by re-incorporating in the Cayman Islands and having their IPO either in HKSE or NYSE, for instance, Alibaba.
 
48
Id, at Article 103.
 
49
2014 Securities Law, Article 13.
 
50
2014 Company Law, Article 142.
 
51
2014 Securities Law, Article 16.
 
52
2014 Securities Law, Article 22 and Article 24.
 
53
Administrative Rules on Acquisition, Article 75.
 
54
2014 Securities Law, Article 47.
 
55
Administrative Rules on Acquisition, Article 8.
 
56
2014 Company Law, Article 147.
 
57
Guidelines on Article of Associations, Article 98.
 
58
2014 Securities Law, Article 88 and Article 96.
 
59
Administrative Rules on Acquisition, Article 62.
 
60
2014 Securities Law, Article 51.
 
61
2014 Company Law, Article 102.
 
62
See Huang (2008), pp. 153–175.
 
63
Unocal v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985).
 
64
Huang (2008), pp. 153–175.
 
65
See Lee (2006), p. 897.
 
66
See Nikkel (1995), p. 503.
 
67
See Augur (2000), pp. 1–16.
 
68
See Christmann and Taylor (2001), pp. 439–458.
 
69
2014 Securities Law, Article 8, 102, 174.
 
70
See Jordan and Hughes (2007), p. 205.
 
71
CSRC. Administrative Measures of Stock Exchanges, Article 22.
 
72
CSRC. Administrative Measures of Stock Exchanges, Article 23.
 
73
2014 Securities Law, Article 107.
 
74
CSRC. Administrative Measures of Stock Exchanges, Article 19.
 
75
CSRC. Administrative Measures of Stock Exchanges, Article 28.
 
76
See Wei (2005), p. 479.
 
77
Tang (2017c), p. 170.
 
78
2014 Administrative Rules on Acquisition, Art.33.
 
79
Tang (2017c), p. 171.
 
80
Council Directive 2004/25, art. 9, 2004 O.J. (L142) 8 (EC).
 
81
Tang (2017c), p. 172.
 
82
See 2014 Securities Law, Article 88.
 
83
See the City Code, Part F1, Rule 9.
 
84
Council Directive 2004/25, Art. 5, 2004 O.J. (L142) 8 (EC).
 
85
The 90th United States Congress, Williams Act (82 Stat. 455), Section 14d, Section 14e.
 
86
Council Directive 2004/25, Art. 5(3), 2004 O.J. (L142) 8 (EC).
 
87
Hungary and Slovenia have a triggering point of 25% voting rights; Austria, Belgium, Cyprus, Germany, Finland, Ireland, Italy, the Netherlands, Spain and Sweden have a triggering point of 30% voting rights; Greece, France, Luxembourg and Slovakia have a triggering point of 1/3 voting rights (33.33% voting rights);Czech Republic and Lithuania have a triggering point of 40% voting rights; Latvia, Malta and Portugal have a triggering point of 50% voting rights; Poland has a triggering point of 66% voting rights. See COMMISSION OF THE EUROPEAN COMMUNITIES. Report on the implementation of the Directive on Takeover Bids. Brussels, 21.02.2007.SEC(2007)268. Annex 2.
 
88
Id.
 
89
Tang (2018), pp. 47–48.
 
90
Easterbrook and Fischel (1981), pp. 1161–1204. Partial offer is definitely cheaper, the acquirer only have to acquire as much shares as he needs.
 
91
Id. Compare with partial offer, general offer provides minority shareholders more protection.
 
92
Tang (2017b), pp. 106–114.
 
93
See Li et al. (2009).
 
94
2014 Securities Law, Article 8, 102, 174.
 
95
See Wei (2005), p. 479.
 
96
Jensen (1986), pp. 323–329.
 
97
Tang (2017c), p. 171.
 
98
COMMISSION OF THE EUROPEAN COMMUNITIES. Report on the implementation of the Directive on Takeover Bids. Brussels, 21.02.2007.SEC(2007)268. Annex 3.
 
99
Changxing Sun (2009), pp. 28–30.
 
100
See Li et al. (2009).
 
101
See Kling and Gao (2008), pp. 374–387.
 
102
See Bailey et al. (2009), pp. 9–19.
 
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Metadata
Title
On the Supply Side of Western Hostile Takeover Law and Its Implications for China
Authors
Ciyun Zhu
Linyao Tang
Copyright Year
2021
DOI
https://doi.org/10.1007/978-3-030-72345-3_3

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