Profit compensation mechanism and interest protection of minority shareholders in merger and reorganization

Abstract

In the process of merger and reorganization transaction, major shareholders often make use of information asymmetry and control advantage to damage the interests of minority shareholders. In addition, in order to promote the smooth development of mergers and acquisitions, many enterprises often adopt the signing of performance commitments and profit compensation agreements to protect the interests of minority shareholders. However, even if the commitment subject undertakes profit compensation, can it ensure that the interests of minority shareholders will not be harmed? The article takes Jinyu Automobile City as an example to study whether the profit compensation mechanism in the merger and reorganization can protect the interests of minority shareholders. The research results show that the profit compensation mechanism essentially does not play a role in protecting the interests of minority shareholders. This paper has certain policy enlightenment to explore the influence mechanism of profit compensation mechanism on the interest protection of minority shareholders and improve the relevant laws and regulations on the interest protection of minority shareholders.