Hostile Takeovers and Takeover Defences in China

Abstract

Many companies listed in China adopted anti-takeover provisions (ATPs) in their Articles of Association in the recent years. Although the existing regulatory regime does not clearly address the legitimacy of most defensive tactics, the Chinese regulatory authorities implicitly allow such ATPs. This thesis reveals that the widely adopted ATPs can effectively impede potential takeovers and provide undue protection to inefficient incumbent directors and dominant shareholders. The development of an active corporate control market will be significantly delayed if such ATPs are condoned. This thesis argues that the use of ex ante takeover defences should not be allowed. A new regulatory regime for takeover defences in China is also proposed.