mulgated by the National People's Congress.(9) The Company Law includes some provisions on shares transfer and company merger that is related to takeover. Actually, before the Interim Provisions was issued, the Draft Securities Law had been under debate. After several years of debate, the Securities Law at last was enacted at the end of December 1998 and came into force on 1 July 1999.
As I have mentioned above, the Interim Provisions and the Securities Law only cover listed company takeovers, while the Company Law applies to other company takeovers. Due to the word limit, this short essay will mainly focus on listed company takeovers.
Chapter 4 of the Securities Law deals with takeovers, which retains basic takeover provisions in the Interim Provisions; it also makes some changes to make takeover a little easier and more efficient. I would like to summarise as follows the main takeover provisions of the Securities Law as well as the changes it has made. Meanwhile, I would like to compare them with the counterparts in CL, especially in the CLERP Act.
In Interim Provisions, a natural person was not allowed to hold 5 per thousand shares in a listed company, so only a legal person can be a takeover bidder. This limitation no longer exists in the Securities Law. This is a very important reform to the socialist China.
According to Article 78, a listed company may be taken over by bid or by agreement. The latter was not allowed in the Interim Provisions. Only Articl英语论文网 【http://www.51lunwen.org】e 89 is especially about takeover by agreement, that a purchaser can conclude shares transfer agreements with the shareholders of a listed company. After the agreements are made, the purchaser should report to CSRC and the stock exchange and make a public disclosure within 3 days. The agreements shall not be carried out before the disclosure. This provision makes takeover much easier. But it is criticised for little transparency, and unfair to minority shareholders. In practice, if a person wants to take over a listed company by agreement, the person has to negotiate with the controlling shareholders; it is almost impossible to negotiate with thousands of minority shareholders.
The takeover threshold in China is 30%,(10) but it does not mean that a person can trade shares freely before he possesses 30% shares of a listed company. Under Article 79, if a person possesses 5% shares of a listed company on market, he should report to CSRC, the stock exchange and the company, and should make a public disclosure within 3 days. He is prohibited from trading the company's shares in the prescribed period. The rule also applies whenever the person increases or decreases his share possession by 5% point of the total shares in the company. When the person possesses 30% shares of the company, he should make a takeover bid if he wants to make more purchase on market, except that it is exempted by CSRC.(11) A proportional bid is allowed under Article 82.
This provision is similar to
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