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ened 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.

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 background 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 Th