Anti Takeover Game In The 62Nd Issue Of Shenzhen Regulation: The "Boundary" Between "Counter Control" And "Control"

? ? ? ? In the face of the acquisition and anti takeover of listed companies, it seems to be a good choice to modify the articles of association. The purpose is to strengthen the moat by building a "fence", prevent "barbarians" from purchasing the control rights of listed companies maliciously, maintain the normal production and operation of the company and the stability of the stock market, and protect the legitimate rights and interests of the company and investors.

? ? ? ? The articles of association is the fundamental document of listed companies, which is related to corporate governance and corporate control. The addition of autonomy norms in the company's articles of association is a manifestation of the company's autonomy, which basically conforms to the legislative orientation of the current company law. However, some listed companies are suspected of abusing the "anti takeover clause" repeatedly in the market, which leads to the breakthrough of the bottom line of the legal system such as the company law and the governance standards of listed companies, which further constitutes the query of "insider control" and "improper restriction of shareholders' rights", resulting in the high "fence" evolving into the hotbed of "private desire" of major shareholders or management. In view of the dispute about "where is the boundary between anti takeover measures and corporate autonomy", this issue will talk about how to grasp the scale of "anti system" in the anti takeover game and prevent "cross-border".

How to define hostile takeover

In the early stage, Ciwen media in the process of amending the articles of association, some new defense provisions for malicious takeover caused new market attention. The first problem is how to define "hostile takeover". The company believes that the acquisition without the consent of the board of directors is a malicious acquisition, and the general meeting of shareholders of the company can determine whether it is a malicious acquisition by ordinary resolution in the case of the buyer's avoidance. If there are differences, the board of directors has the right to directly determine whether it is a malicious acquisition. It is worth mentioning that even if the general meeting of shareholders does not confirm the malicious takeover, it will not affect the board of directors to take the initiative to take anti takeover measures according to the articles of association.

The current legal provisions on acquisition mainly focus on the legality of the act itself, and there is no clear regulation on whether the act is malicious or not. Therefore, different market entities have different understanding of hostile takeover. But the most basic guiding ideology and value orientation of legislation is fairness and justice, which is an important prerequisite for the definition of malicious takeover. In the view of market participants, is it appropriate and reasonable to confirm the acquisition of listed companies by ordinary resolution of the general meeting of shareholders or directly determined by the board of directors? If the general meeting of shareholders is not identified as a hostile takeover, but the board of directors of the company can still take anti takeover measures. Whether there is "imbalance" of shareholders' rights, whether there will be "internal controller" problem, whether it is contrary to the principle of fairness and justice, is worth further discussion.

In this regard, in the letter of concern issued by the exchange to Ciwen media, the company was asked to explain whether the legal or regulatory basis for the definition of "malicious takeover" in the above terms is in violation of the principle of fairness, and whether there is improper restriction on investors to buy and sell the company's shares and exercise the rights of shareholders according to law. From this, we can see the concerns and concerns of regulators.

Huangtai liquor industry also planned to include "the determination made by the resolution of the board of directors" as the final basis for judging whether it constitutes a hostile takeover or not, and other similar contents in the company's articles of association to be revised. Under the questioning and pressure of all parties in the market, Huangtai liquor industry finally cancelled the relevant amendments.

Are restrictions on rights and huge compensation reasonable

The reporter of 21st century economic report has noticed that in addition to "warning in advance", some listed companies have set up many "barriers" at the level of board of directors and general meeting of shareholders. The typical way is to set up super majority clause, including the stipulation that the relevant bills should be passed by three-quarters of the voting rights held by the shareholders present at the meeting, or even increase the proportion of voting to four fifths; There are also ways to limit shareholders' rights of proposal and nomination by increasing the shareholding ratio or setting the shareholding period.

Huangtai liquor, as mentioned above, once set a limit on the shareholders who nominated candidates for non independent directors in the proposed revised articles of association, requiring them to hold shares for more than 365 days, stipulating that "in the event of a hostile takeover of the company, the purchaser and the persons acting in concert have no right to nominate candidates for directors and supervisors", At the same time, it is required that "when the shareholders' meeting deliberates on the malicious acquirer and its persons acting in concert, it shall be passed by a resolution of more than three-quarters of the voting rights held by the shareholders attending the meeting". Similar cases include st Renzhi, etc.

In the view of many legal experts, the above-mentioned provisions may lead to the former major shareholders having "one vote veto power", and "multi-layer card setting" restricts investors to buy and sell company shares and exercise shareholders' rights, which is a typical "poison pill plan" designed for anti takeover.

In addition, some companies also set up the "golden parachute plan", which requires that when the company is acquired and the directors and senior managers are dismissed, they will receive a large amount of compensation from the company at one time, such as the economic compensation standard of 3-10 times of the total pre tax salary within the specified post years, so as to deter malicious takeover.

No matter whether the legal basis of the compensation scheme payment standard formulated by the company is sufficient, the directors, supervisors and senior management of the company can obtain huge compensation by combining with the relevant arrangements such as the direct determination of hostile takeover by the board of directors of the company and the active anti takeover measures. Compared with the acquisition itself, the difficulty coefficient is much lower, whether it is suspected of interest transfer, whether it is related to the transfer of interests, whether it is possible to take anti takeover measures or not Whether it violates the duty of loyalty of directors, supervisors and senior executives and infringes on the interests of the company and all shareholders deserves public reflection.

Increase shareholder's credit obligation or influence "value discovery"

In a series of anti takeover measures, "adding shareholders' disclosure obligations and reducing the proportion of shares in information disclosure" is also a more common way.

According to the relevant provisions of the securities law and the administrative measures for the acquisition of listed companies, the shareholders with a shareholding ratio of more than 5% or each increase or decrease of 5% shall perform the mandatory reporting and announcement obligations, including the name or name of the information disclosure obligors, correspondence address, registered capital, registration number and code, enterprise type and economic nature, main business scope, and Operating period, ownership structure chart, shareholding purpose and capital source, increase and decrease plan in the next 12 months, etc.

However, in order to prevent hostile takeover, some listed companies have reduced the share proportion of the above-mentioned equity change information disclosure from 5% to 3% when revising the company's articles of association, which is more stringent than the minimum requirement, and increases the disclosure obligation of shareholders in disguise.

When the investor's shareholding reaches 3% but not more than 5%, it may be a general financial investment and has no intention to purchase, or at that time, although he has the intention to purchase, but before reaching 5%, he decides to give up. The listed company requires the purchaser to perform the reporting and announcement obligations when the shareholding ratio reaches 3%, or there are some problems such as increasing the cost of information disclosure, disclosing business secrets, and so on It hinders proper investment operation. At the same time, the 3% shareholding ratio can not pose a threat and harm to the existing controlling shareholders and actual controllers of listed companies. On the contrary, it may lead to abnormal fluctuations in stock trading and affect the value discovery and resource allocation function of the capital market.

Balance the boundary between "countervailing" and "autonomy" and standardize market-oriented purchase behavior

This series of cases reflects the complex relationship between the provisions of the company law and the autonomy of the articles of association, the interests of controlling shareholders and small and medium investors, and the management and shareholders“ The harm of "barbarians" is obvious, but we should pay more attention to the crisis of corporate autonomy, the risk of "insider control" and the damage to the rights and interests of small and medium shareholders caused by the "anti system" of external investors.

In fact, according to the statistics of public data, from 2017 to 2020, a total of 489 A-share listed companies have changed their control rights in the four years, and they show a trend of increasing year by year. However, by comparing the cases of "active change of ownership" and "passive change of ownership", there is no obvious linear relationship between whether the external investors are welcomed by the company's current management and the subsequent development of listed companies.

In the view of many market participants, acquisition is essentially a neutral market behavior. On the one hand, the acquirer directly crosses the management of the target company, which easily aggravates the contradiction and triggers the management to take radical anti takeover measures, which affects the stability of the company. On the other hand, acquisition can increase the external checks and balances on the company's management, urge the directors, supervisors and senior officials to perform their duties diligently, and improve the standard operation and performance level of the company. Moreover, acquisition is also one of the "metabolism" mechanisms of the capital market, which can inject fresh blood into the company, eliminate the backward management mode and improve the efficiency of asset allocation.

Liu Junhai, a professor of Law School of Renmin University of China, pointed out in an interview: "the excessive protection of the management board of the target company is not desirable. Because there is no pressure from the external non consensual acquisition, it is easy for the management to slack off and lack the internal motivation and external pressure to create value for shareholders and realize the maximization of shareholder value, Loss of competitiveness. "

Some of the listed companies with more dispersed shares have built a high "fence", whether they can really block out hostile takeover, whether the various restrictions in the articles of association have legal effect, whether "insider control" and "exclusive power of major shareholders" arise, and whether the "fence" eventually becomes a "cover up" to protect managers' selfish desires, These problems need to be further tested by law and market.

Do what you want without exceeding the rules. In the view of industry insiders, both the acquirer and the acquiree should maintain enough awe of the law and the market, keep their own behavior bottom line, do not cross the line at will, let alone use their own position and capital advantages to suppress the other party maliciously. At the same time, they should fulfill the obligation of information disclosure in accordance with laws and regulations, fully prompt the relevant risks, and leave the rest to the judgment of the market, I believe that investors will make their own rational judgment.

?