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论文题目：Comparative Perspective in Take-over Bid of the Company in China, EU and U.S.A.
论文语种：英文
您的研究方向：法律
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您的国家：荷兰
您的学校背景：荷兰名校
要求字数：15000
论文用途：硕士毕业论文 Master Degree
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补充要求和说明：>> 2. 论文题纲参考<> 要求写三章, 其中>> Chapter 2. China Part, 5000字,>>>> Chapter 3. EU Part ( U.K.) 5000字,>>>> Chapter 5. Make Comparisons among all countries’ practises, 这一章 2500 字.>>>> 请注意,引用的论文要达到 50 个,其中 外文的论文引用要达到 25 个. 引用的论文请写出来.>>>>>> 3. 文章注意要有所创新.>> 特别是 chapter 2. section 5 要有所创新.>> Chapter 5. 其实是全文的点睛的地方,这一章可以不按题纲来写,能不能写出水平就在这一章了.希望您多花点心思.
The following questions are about your thesis and plan of action
Title
Comparative Perspective in Take-over Bid of the Company in China, EU and U.S.A.
Problem
Hostile take-over bid is a kind of short-term profit-earning behaviour. Be contrary to the long-term development of acquired enterprises that have been hostile taken-over. The short-term profit motivation of the shareholders will affect the production efficiency of the enterprises.
Principal legal question
Hostile Take-over Bid
Preliminary legal questions
Plan of action
Chapter 1. Introduction
Section 1: Background of hostile take-over bid.
Section 2: Definition of hostile take-over bid and analysis of its value
Section 3: Purpose of hostile take-over bid.
Section 1: Corporate governance and U.K take-over.
Section 2: 13 EC Directive: different EU members will implement the directive individually and seperately.
Section 3: Law regulating the tender-offer of the U.K. company.
Section 4: Anti take-over legislation/ measures in U.K.
Completed Apr. 25, 2009
Chapter 4. USA Part
Section 1: U.S.A. cases in Hostile Take-over bids.
Section 2: Make analysis of Issues Existed in Hostile Take-over Bid in US cases.
Section 3: Anti Hostile Take-over Bid Measures in U.S.
Section 4: U.S. legislation in hostile take-over bid.
Chapter 5. Make Comparisons among all countries’ practises
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Section 1: Anti Hostile Take-over Bid Measures
Section 2: Related legislations’ interpretation
Section 3: Implementation of related legislation.
Preliminary conclusion
1) From an overall perspective, how to regulate the take-over of the markets/ multi-national companies
2) How to improve the Chinese company / Security law (related regulation to help to resist the hostile take-over bid.
Analyze Hostile Take-over Bid from a Comparative Perspective
Introduction
Hostile takeover was originated fromhttp://www.ukassignment.org/daixieAssignment/daixiehelanassignment/ the countries such as U.K. and United States. There are four major conditions constitute the hostile takeover:
1) The subject of hostile is listed company.
2) The goal of the hostile takeover is to achieve the control power of the target company.
3) And the motivation of hostile takeover has received the opposition of the management board of the target company.
4) And there is obvious equity decentralization exists in such listed companies which will be hostile taken over.
The essential principle of hostile takeover is that the buyer can takeover its target company by buying large amount of the company shares without the confirmation and cooperation of the management organ of the target company. After the bidder has become the new controlling shareholder, the original management board of the target company will be dismissed. However, from one hand, hostile takeover has the function of eliminating the low-efficiency management board, and it can reduce the agency cost and improve the efficiency of internal corporate governance, and it can form an external supervision mechanism to urge the management board to work efficiently to increase the operation level and profits. Under the pressure of losing job, it can be a great impetus of the management board to try all efforts to work hard and increase the efficiency of operating the company. Due to the performance of the listed companies can be reflected by the share value on the security markets. Bad performance of the company’s operation will be reflected by the low price of the share value, so such kind of listed companies will be the target of the hostile takeover raiders; on the other hand, it also have some negative impacts to the target company. For example, due to the long-term operation of the company, all the management board have already established stable and good relationship in the markets, after the hostile takeover the management board will be replaced totally, however, all the human resources, supply chains, trade relationship and sales channels which have been established by the board will be cut off. Therefore, the condition will be negative for the future development of the target company due to the newly established management board need to try hard to build the new relationship in the markets and with the other companies. At the same time, the interests of the minority shareholders will be damaged, too. So how to regulate hostile take over and play the positive effects and prevent their side effects is an issue which worth our further thinking.#p#分页标题#e#
We will start the analysis of the hostile take-over from the perspective of U.S.A, EU(U.K) and China. In fact, the hostile take-over phenomenon of the company is prosperous in U.K. and U.SA. while China hasn’t such rich experiences in the hostile take-over bid.
U.K.: the earliest hostile takeover took place in U.K. According to the research of F.Zhang , the hostile takeover first happened in U.K. due to the following three causes:
1) Obvious changes occur in the ownership structure of the English companies after second world war. Ownership decentralization, the steady increase of the ownership property of the institutional investors, all of the above-mentioned factors have created the useful conditions for the separation of the ownership and control right of the company.
2) U.K. had made summarizing amendments of the company act in 1948. Especially the annual reporting system, auditor system, offering an approach for the bidder company to acquire the information of the target company through a reasonable method. The major law to regulate the takeover market of the company is《UK City Code》
3) The economic condition of the English companies is fatal to the company bidders after the second World War: on the one hand, due to the U.K. companies do not encourage the distribution of the profit, so that the share value of most English companies are lower than their total value; on the other hand, due to lots of companies maintain the unused depreciation fund during the second World War and large amounts of profit gained after the war, it means that the companies have large amount of cash stocks. Otherwise, the book value of the fixed assets of companies are recorded at the cost during the moment of the war, due to the high-speed inflation after the second World War, the actual value of the fixed assets are much higher than the account value. Under the above mentioned circumstances, the bidder can acquire large amount of profit through the take over of the companies. Otherwise, with the change of the traditional commercial ethics concept, more and more investors ﹑commercial and investment bank participate in the hostile takeover, which makes the financing of the hostile takeover much easier than before. All of above-mentioned factors create a better environment for the growth of hostile takeover in U.K.
U.S.A: The hostile takeover had been transferred from U.K. to U.S.A. In U.S., the takeover is regulated under both the federal and state level, although each set of the regulations have their own specific scope and purpose. Until the first half of the 19th century, the U.S.A. court holds a negative attitude towards one company holding the share of another company. The court said:〝The existence of a company means it shall implement its power and expand capital by its own managers and employees instead of the target company it has controlled.〞 The condition has been improved until 1889: New Jersey State amended its 1888 company act”. Only after 1889, it has been one of the existed powers of the American company to purchase and hold the other company’s shares to control the company. #p#分页标题#e#
On the same moment, the “Blue Sky Act” emerged in lots of states in U.S.A. It had paved the way for the free transfer of the equity. And the self-regulation Act of New York Stock Exchange to refuse the shares without voting rights to be listed on the stock market, which also paved the way for that the voting rights should be transferred together with the stocks.
And what we need to pay attention is that: in the《1933 American Security Law》and《1934 American Security Transaction Law》, the Principle of Openness introduced by President Rutherford has been implemented thoroughly. The carry out of the two new laws has declared the establishment of the information disclosure system. It means the bidders can know about the operation condition of their target companies through a reasonable and lawful approach. And all of these new improvements of the law have paved the way for the hostile takeover bid.
China: Hostile takeover and anti-takeover of the companies began from the “Bao-Yan Event” occurred in the September of 1993. It has been half of a century later than the western countries. It is a case happened in the secondary stock market which promotes reform and improvements of Chinese security market. However, the Chinese security market has not developed as mature as U.S.A. and U.K. due to several key factors:
1) ownership concentration exist in most Chinese listed companies;
2) state-owned shares take a dominant position in the security market;
3) No smooth circulation of the state-owned shares. If the Chinese security market can delete the restriction of state-owned share’s circulation, and with the dilution of the holding rights, more hostile takeover will be expected in Chinese market. In order to regulate the hostile takeover market, there are several codes regulating the security market and the hostile takeover:《Chinese Company Law》﹑《Security Law》、《Administration Rules on Acquisition of Listed Company》、《Administration Rules of the Takeover of Listed Companies Procedures》. All of above-mentioned laws and regulations have protected the interests of shareholder in a positive way and guaranteed the transaction fairness and market order. From the other side, some provisions have increased the cost of hostile takeover, e.g. tender offer rules.
Hostile takeover plays a dual-effect in the development of Chinese enterprises: improve the operation efficiency of companies; modify corporate governance structure; lower down the agency cost; all of which have proved that there will be a long-term development of hostile takeover in China’s security market. However, one coin always has two sides, hostile takeover also plays a negative role in the Chinese markets. Some multinational companies will use the method of hostile takeover to dominate our native major enterprises, intend to monopolize Chinese key industries. We need to be aware of preventing such kind of issues from happening as soon as possible.#p#分页标题#e#
Chapter 1: USA Part
1.1 Corporate governance and hostile take-over
Talking about the hostile take-over, we cannot ignore U.S. Most of the hostile take-over cases take place in U.S.A. in the current world. The high frequency of the occurrence of the hostile take-over in U.S. has close relationship with the perfect legal system and the tolerant government attitudes.
Due to the tender-offer system in the U.S. is voluntary. The bidder can make an offer voluntarily and determine the share proportion he wants to acquire. However, the American tender offer legislation regulates that the acquirer needs to disclose the backgroundhttp://www.ukassignment.org/daixieAssignment/daixiehelanassignment/ information of the bidder, their intention to acquire the shares and the tender-offer plan. The U.S. tender-offer legislation recognizes the free transfer of the control holding equity in the listed company and they have not established the mandatory tender offer mechanisms. The related regulation gives opportunities to the bidder to acquire the company, even a hostile take-over of the company. On the other hand, the corporate governance structure in U.S. is one-tier board system, which means the there is only one board in the company which takes both the roles : management and supervision . Obviously, the member of the management board will consider their own benefits when they meet the condition of the conflict of interests. Therefore, an efficient outside supervision mechanism should be established to keep the operation of company under a highly efficient way. The hostile take-over mechanism can be suitable here to take this position.
1.2 The Hostile take-over legislation in U.S.
We can take a brief view of the American legislation to regulate the tender offer market of U.S.:
1) 《1968 Williams Act》:Due to the take-over of a company and the transfer of the control right play an important role to the shareholders’ interests. However, it hasn’t been restricted by the significant alteration procedure and regulation. In order to protect the shareholders’ interests of target companies in the tender offer, the U.S. congress carried out the《1968 Williams Act》as the amendment of the《U.S.
Securities and Exchange Act of 1934》, the security act modified the regulation of the take-over of the company substantively and procedurally. It is the earliest regulation enacts the information disclosure mechanism of American listed companies: the information disclosure system has become the 13(d)、(e) and 14(d)、(e)、(f) in the 1934 Securities and Exchange Act. For example: it makes detailed stipulation about the tender-offer through the stock exchange by the method of offer and acquisition. The purpose of the 《1968 Williams Act》is that the Act wants to narrow one of curbing through regulation the unregulated activities of tender offors in order to protect target company shareholders and investors in general by affording them adequate information to enable them to decide wisely how to react to a tender offer. #p#分页标题#e#
2)《Revised Model Business Commercial Act》: it furnishes the legal basis for the exemption of director’s liabilities in § 8.30. STANDARDS OF CONDUCT FOR DIRECTORS (c) 、(d) 、(e) , the provisions mentioned that the directors can trust some professional people such as lawyers and accountants when they are handling the issues out of their competency. At the same time, the provisions of the 《Revised Model Business Commercial Act》also provides the legal background for the exemption of director′s liabilities in their future activities.
3) The three core federal anti-trust laws: Hostile take-over can also be an issue regulated by anti-monopoly law in U.S. Sometimes an act of acquiring the company’s shares will play a dual role: it becomes a hostile take-over, which is regulated by the hostile take-over law; at the same time, it also will turn to a monopoly issue, which is regulated by anti-trust laws. Hence, U.S. enacts several important codes to regulate and supervise the merger of the company. 《1890 the Sherman Act》 as a“ comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” . In 1914, Congress passed two additional anti-trust laws:《The Federal Trade Commission Act》which created the FTC, and《The Clayton Act》. With some revisions, they are the three core federal antitrust laws still in effect today.
1.3 Anti take-over approaches in U.S.
A. The federal and states legal framework
It exists an interesting phenomenon in the anti take-over issues in U.S. There is an obvious divergence between the theory and legislation. Scholars and legislators in U.S. academic community take 3 kinds of ideas: Supportive, neutral and opposite. The people who hold the supportive view think take-over of the company can promote the economic growth of U.S. company, on the other hand, they oppose the legislation to regulate the take-over of the company and take strongly opposite view to resist the anti take-over legislation. People who hold the neutral opinion think law should impose an adequate limit of the take-over of the company. In principle, they uphold the take-over of the company, however, they permit the auction of the company by the management organ to seek for better profits and operation efficiency. People who hold the reserved views take a negative attitude about the take-over of the company. They think take-over will decrease economic performance of the company, and they take an active role in implementing the anti take-over regulation. Totally speaking, scholars who hold the former two views occupy the most part, and who holder the negative view occupy the lease part. However, the U.S. federal laws and states laws adopt the last view.
It seems that all states of U.S. law prejudice the hostile take-over, it has been embodied from the legislation of all states law: they impose restrict regulation in the take-over procedures and limit the hostile take-over. There are two waives of the anti take-over law enactment: First period, from 1968-1982; the second period starts from 1982. Since 1968 the Williams Act had been enacted. All states in U.S. start to draft the legislation about the take-over bid. The first state that enacted the law is Virginia . And until the mid-term of 1970s, nearly all states have implemented their own law regarding to the take-over bid of the company. The obvious features in the legislation about the company’s take-over are as follows: 1) compared with the 1968 The Williams Act, the new law strengthened the bidders’ financial burden, for instance: when a tender-offer is made, the bidder need to get the approval of the states’ court; 2) the bidder should disclose more information about the take-over bid to the public; 3) extend the take-over bid period, etc. All these new enacted law have received the company bidders’ dissatisfaction, some of them went to the court and require the modification of the related states’ laws. After the case of 1982 Edger V. MITE , the Supreme Court of the U.S. declared that the states law have violated the U.S. Constitution. It indicated the beginning of the second round of take-over bid rules enactment. The new round law enactment have regulated hostile take-over bid into the internal affairs of the company, and states’ company law will take charge of the hostile take-over bid. The conclusion of 1987 CTS Corp V. Dynamics Corp of America has received the confirmation of the Supreme Court of the U.S. and two improvements have been made in the new take-over laws : #p#分页标题#e#
1) The state’s company law will play the limitation of hostile take-over bid;
2) Permit the management board of the company take anti take-over bid measures if necessary.
At this moment, two distinguished state anti takeover law has become the typical examples for all the other states in U.S.: Anti-takeover law of Delaware and Ant-takeover law of Pennsylvania. The first one can be regarded as a “mild law”, and the latter one has been regarded as the most strict law in the anti takeover law history. Due to it regulated five principles and strict control and limit the hostile takeover of the company in U.S .
B. Three Principles Imposed in Anti Take-over Measures
1) Fiduciary task of the directors and business judgment rule
The duty of directors in U.S. has two major duties: duty of loyalty and duty of fiduciary. And the U.S. law define the duty of fiduciary as: A general cautious person under the same condition, the extent of diligence, care and experience he can pay to his business. You know, different companies have different situations, and directors will take decisions when they think it is necessary and urgent. In The Revised Model Business Act, §8:30, it has stipulated 3 requirements as the standard to evaluate whether the decisions taken by the directors can fulfill the fiduciary task:
a) In good faith,
b) The attention, which should have been paid by a general cautious person under the similar condition or at the same position,
c) Take a reasonable method which he thinks will be the most suitable way to handle the company’s issues.
In the sophisticated business environment, opportunities always come with risks. Therefore, at the same time when a director makes decision, he should consider the risks he will take. Although in The Revised Model Business Act has indicated the standard to evaluate the directors’ duty, but it is not so clear and give a ambiguous threshold. Because sometimes when the directors gain profits when he do some business for the company
He may sacrifice some other interests for the company. At this moment if we use the duty of fiduciary to make judgments that they have disobeyed the duty of fiduciary, it is unfair of the directors. Moreover, they may consider too much when they make a risky business judgment which leads them to lose the precious opportunity. From the other side, the court cannot make the accurate judgments after the directors have taken decisions. Due to they haven’t so much time to make the investigation and so rich professional knowledge to make the discretion to justify whether the decision taken is right or wrong. In order to solve the dilemma, the Cheff V.Mathes case orients the adoption of “The Business Judgment Rule”. It was the first case which adopted the “ The Business Judgment Rule”, the court will assume the directors who made decisions in the case has obeyed the rule, if the plaintiff think the directors have violated the duty of fiduciary, he may be responsible to take the burden of proof to show the directors’ action violate the standard. Such kind of standard is called Business Judgment Rule. If the directors are entitled to be protected by the rule, the court will not consider the result done to the company due to the decisions taken by the directors, if directors are not entitled by the protection rule, the court will justify the material injury done to the interests of the company and minority shareholders.#p#分页标题#e#
2) The Auction Principle
As above mentioned if directors of target company think the bidders will threaten the existence and the management of their company, they may take effective defensive anti-takeover measures to protect the company and themselves. However, if the anti take-over of target company failed and the fate of the target company to be sold has been doomed, what they need to do is just to put the company in the auction and to sell it to the buyer who can offer the best price. In the case of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. Forbes made the tender-offer for two times in 1985 and his intention is to purchase Revlon, after two times friendly tender offer had failed, Forbes threaten the management board of Revlon that they will make a hostile takeover of Revlon. After the discussion of the board meeting of Revlon they found the consideration provided by Forbes to takeover Revlon is much lower than the current share value of Revlon, moreover, once the hostile takeover of Revlon succeed it will face to the condition of dissolution. So directors of Revlon take active defense measure ( Poison Pill and White Knight) to prevent the company to be hostile taken over. However, Forbes aimed at control Revlon and increased the consideration of the shares again. At this moment, the take-over of Revlon is unavoidable, the efforts tried by directors can not secured the company. So what they can do is put Revlon to auction and try their best efforts to seek for the best interest of the company’s shareholders.
The Revlon, INC. V. Mac Andrews & Forbes Holdings, Inc, case has set up two principles for the future takeover of the company:
a) When the takeover of the company is unavoidable, the duty of directors of target company should turn to put the company into auction instead of take defensive measures collectively. During the auction period, the directors need to sell the company at a best price and seek for the best portfolio interest for the shareholders.
b) During the auction term, directors of target company should keephttp://www.ukassignment.org/daixieAssignment/daixiehelanassignment/ a neutral position.
The two principles has been implemented in the future hostile takeover cases in U.S. widely.
3) The Best Price Principle
After the implementation of the auction principle, the duty of directors of target company still continues, they should seek for the best price for the company to be sold to the other party. The essence of the best price is not the traditionally highest price which a bidder can offer, it is a most reasonable price provided by the bidder. Management organ of the target company sometimes don’t prioritize the price as the first position, instead they will consider a reasonable offer at the most suitable price if the bidder is a company which is very reputable and responsible.
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