Takeover Law in the UK, the EU and China : State Interests, Market Players, and Governance Mechanisms

"This book investigates stakeholders' interests, market players, and governance models for the takeover market in the changing global economic orders. Authors from the UK, Germany, the Netherlands, Australia, and China discuss takeovers in the context of China as a rising power in the global M&A market and re-examine takeover as an efficient method for corporate competition, consolidation, and restructuring. China has come to embrace takeovers as a market practice and is seeking directions for further reforms of its law, regulatory model, and banking system in order to compete with other economic powers. Yet, China is at a very different economic development stage and has different legal and political structures. State-owned enterprises dominate the Shanghai and Shenzhen stock markets - a very different landscape from UK and European exchanges. Researchers and policy makers are currently developing options in response to needs for reform. Recently, China has also announced the opening of its financial markets to foreign ownership. This book reflects on the UK and European models and focuses on the policy choices for China to transform its capital market. The book is of interest to postgraduate students and researchers (LLM, PhD, postdocs), law and management/finance academics, and policy makers." Preface Contents Understanding Takeover Law in the Global Context 1 Introduction 2 Power Restructuring 3 The Rise of Economic Nationalism 4 Impact on China ́s Domestic Takeover Market 5 Will China Reshape the Global System? 6 What Can the EU Learn from China, and What China Can Learn from the EU? 7 Conclusion References Conflict of Goals in Takeover Law: The Impossible Regulatory Alignment Between UK and China 1 Introduction 2 Economic Model and the Focus on Its Industry Policy 2.1 Differences in National Economies and the Impacts on the Takeover Regulatory Model 2.2 UK ́s Self-regulatory Model and the Influence of the Financial Services Industry 2.3 China ́s Economic Model and Lack of Institutional Investors 2.4 The Problem of Shadow Banking and Its Impact on the Takeover Market 2.5 The Role of Financial Institutions Implementing State Policy 3 The Ownership Structure 3.1 The UK ́s Dispersed Model and China ́s Concentrated Model 3.2 The UK ́s Dispersed Shareholding Market and Its Influence on the UK Takeover Market and Its Regulatory Model 3.3 China ́s Concentrated Ownership Structure and Its Reforms 3.4 Ownership Structure and Takeover Law in China 3.4.1 Non-frustration Rule 3.4.2 Mandatory Takeover Bid Rule 4 The Institutional Arrangements of the Takeover Law Framework 4.1 Policy Based Regulatory Model 4.2 China: The Late Comer to Adopt a Takeover Market 4.2.1 CSRC Approaches to the Non-frustration Rule and De Facto Defensive Tactics 4.2.2 Lack of Independent Market Players and the Role of SOEs and SASAC 5 Looking Forward 5.1 Takeover Laws and Regulations 5.2 Market Players 5.3 Regulatory Models: CSRC Centralism and Self-Regulation Model 6 Conclusion References On the Supply Side of Western Hostile Takeover Law and Its Implications for China 1 Introduction 2 Retrospect of the Original Regulatory Models 2.1 History Retrospect 2.2 The Impact of Path Dependency 2.3 Implications So Far 3 The Chinese Regulatory Model 3.1 Reflections of the Substantive Law 3.2 Reflections on Supervisory Practice 3.3 Chinese Fiduciary Duty: A Comparison with the U.S. 3.4 Chinese Self-Regulation: A Comparison with the U.K. 3.5 Chinese Board Neutrality Rule: A Comparison with the E.U. 3.6 Chinese Mandatory Bid Rule: A Comparison with the U.K. and the E.U. 4 Future Legal Improvements 4.1 Modifications of the Board Neutrality Rule 4.2 Improvements of the Mandatory Bid Rule 4.3 Advices for the Limited Self-regulation in China 4.4 Empowering the Institutional Investors in China 5 Ending Remarks References The Role and Future of Self-Regulation in the Market for Corporate Control: A Comparative Narrative of the Two Models in the U... 1 Introduction 2 The Three Modes of the Takeover Regulation 2.1 Courts: e.g. ``Fiduciary Duty Centered Mode ́ ́ of the US 2.2 The Self-Regulatory Model: e.g. the UK 2.2.1 The Takeover Panel and the City Code 2.2.2 No Frustrating Action Principle 2.2.3 Principle of Equal Treatment of Shareholders 2.3 The Governmental Regulation Regime: e.g. The CSRC Centralism Regime of China 3 The UK ́s Self-Regulatory Model and the Takeover Panel: History, Path Dependence, and Reflections 3.1 From Shareholder Centric to Self-regulatory System 3.2 Understanding the UK Self-Regulatory Model 3.2.1 The Path Dependence: Formidable Institutional Investors and Unfading Takeover Panel 3.2.2 Special Background of Self-regulation 3.3 Incomparable Advantages of Self-regulatory Mode 3.4 Functional Premise of Self-regulatory Mode 4 China ́s CSRC Centralism Takeover Regime: Linkage with and Divergence from the UK 4.1 The Hostile Takeover Regulatory Law of China 4.2 The Dilemma of Chinese Takeover Regulation 4.2.1 The Board Centrism Anti-takeover Provisions 4.2.2 The ``CSRC Centralism ́ ́ Path Dependence 4.3 Linkage with the UK: Reflections of the Substantial Law 4.4 Divergence from the UK: China ́s MAR Committee 5 The Future of China ́s Takeover Regulatory Regime: Learned Self-regulation from the UK Experiences 5.1 Optimal Choice of Modes of China: Learn Something from the Self-regulatory Regime in the UK 5.2 Make the Self-Regulatory Institutions Work in China 5.2.1 The Problems of the Chinese Takeover Law in the Mirror of the UK ́s Success 5.2.2 Pieces of Advice for the Limited Self-regulation in China 5.3 Empowering the Institutional Investors in China 5.4 Borrowing Efficiency-Adding Clauses from the City Code 6 Conclusion References Disclosure Rules in Takeovers: Making Sense of Fragmentation in German Law 1 Introduction 1.1 Complexity 1.2 Evolution of Regulation 1.3 The Area of Takeover Laws 2 Layers of Regulation 2.1 Layer 1 2.2 Layer 2 2.3 Layer 3 2.4 Layer 4 3 The Layers in Context 3.1 Disclosure Rules in Layers 1 and 2 3.2 Corporate Governance and Capital Markets at the Interface Between Private and Public Interest: Disclosure Rule in Layers 3... 4 Modes of Acquisition and Types of Interest 5 Application of the Layers in Practice 5.1 The Threshold Rule of §33 WpHG 5.2 Industrial Policy and Capital Market Law: The Challenges of Layer 4 6 Conclusions References ``The Takeover Mirror ́ ́ 1 Introduction 2 Developments in 2018, 2019 2.1 Developments in the First Half-Year Report of 2018 2.2 Developments in the Annual Report of 2018, Most Recent Developments 3 Analysis of Megadeals 3.1 China Three Gorges ́s Failed US$ 10.8 Billion Acquisition of EDP Energias de Portugal 3.1.1 Introduction of the Companies in Question 3.1.2 Overview of the Offer 3.1.3 Shareholder Structure and Voting Rights 3.1.4 Present Situation 3.2 China ́s Geely ́s US$9 Billion Acquisition of Stake in Daimler 3.2.1 Introduction of Companies Concerned 3.2.2 Overview of the Offer 3.2.3 Follow-up 4 EU Legislation 4.1 Disclosure 4.2 Mandatory Offer 4.3 EU Investment Screening Regulation 4.3.1 Some Features of the Proposed Legislation 5 China MandA Legislation 5.1 Fundamental Regulation of Foreign Mergers and Acquisitions of Domestic Enterprises 5.2 Limits on Industries Entry 5.3 Regulations on Security Review and Anti-Monopoly Investigations 5.3.1 Security Review 5.3.2 Anti-Monopoly 5.4 Transfer of State-Owned Property Rights and Equity 5.5 Listed Company 5.6 Foreign Exchange Control 5.7 Approval and Filing 5.8 QFII (Foreign Investment in Securities Products) 5.8.1 Qualification Procedures Open Accounts Custodian ́s Obligation Additional Condition 6 Mirror Case 6.1 Daimler Acquires Geely 6.1.1 Geely ́s Profile 6.1.2 Limits on Industries Entry 6.1.3 Different Ways of Carrying Out MandAs Direct Negotiation Approval and Filing Business Licence Payment Requirements Anti-Monopoly Security Review Indirect Securities and Futures Ordinance Disclosure Mandatory Offers Under the Hong Kong Codes on Takeovers and Mergers The Minority ́s Right to be Bought Out Supervision 6.2 EDP Acquires CTG 6.3 Conclusion 7 New Development in China Mergers and Competition in Digital Markets: Learning from Our Mistakes 1 Introduction 2 The Law 3 The WhatsApp Decision 3.1 Multi-Homing 3.2 Explosive Growth Dynamic Market 4 The Instagram Decision 5 First Mover Advantages in Internet Markets 6 The Flaw 7 Implications for Competition Law and Policy 7.1 Market Definition 7.2 Virgin Markets and Established Markets 8 Conclusion References Books Journals Webpages Working Papers Conference Papers Reports Newspapers Commission Decisions Setting Up Expert Groups Guidelines The Amendment of Anti-Monopoly Law of Merger Remedies: Based on the Empirical Analysis in China 1 Background 2 Legal System for and Rules on Merger Remedies in China 2.1 AML Enforcement Agency 2.2 Legal System for Concentration of Undertakings 2.3 Rules Under Merger Remedy System 3 Basic Logic of Restrictive Conditions 3.1 Value and Positioning of Restrictive Conditions 3.2 Structural Remedy and Behavioral Remedy 3.2.1 Structural Remedy 3.2.2 Behavioral Remedy 3.3 Debate Over Whether Structural or Behavioral Remedy Is Preferred 4 Practice and Reflection on Merger Remedies in China 4.1 Practice of Merger Remedies 4.2 Reflection on Precedence of Remedies 5 Improving the System of Imposing Restrictive Conditions 5.1 Basic Principles for Remedy 5.1.1 Principle of Necessity 5.1.2 Principle of Minimum Intervention 5.1.3 Principle of Effectiveness 5.2 Expertise and Neutrality of Divesture Trustee and Supervisory Trustee 5.3 Increasing Negative Consequences of Illegal Concentration References Evaluating the Mandatory Bid Rule for Takeover Law in China: An Empirical and Comparative Analysis 1 Introduction 2 The Nature and Origins of the Mandatory Bid Rule 3 The Policy Goal of the Mandatory Bid Rule in the UK Takeover Code 3.1 Protecting Minority Shareholders 3.2 Equal Treatment 4 Creating and Destroying Value Through Takeovers: Theoretical and Empirical Evidence 4.1 Value Creation and Destruction in Theory 4.2 Value Creation and Destruction in Practice: Empirical Evidence from the UK and US 4.2.1 Short-Term Effects of Takeovers on the Value of Companies 4.2.2 Long-Term Effects of Takeovers on the Value of Companies 5 The Mandatory Bid Rule in China 5.1 Initial Introduction and Later Reforms to the Mandatory Bid Rule in China 5.2 Regulatory Attitude Towards the Mandatory Bid Rule 6 Evidence from China 6.1 Aims and Scope of the Study 6.2 The Source of Data 6.3 The Sample for Data Analysis 6.4 Methodology 6.5 Two Parameters of Empirical Study 6.6 Results from Data Analysis 6.6.1 The Relationship Between Cumulative Abnormal Return and Holdings 6.6.2 The Relationship Between Cumulative Abnormal Return and Bidders ́ Aims 7 The Mandatory Bid Rule in China: Looking to the Future 7.1 Amendments to the Proportional Partial Bid Rule 7.2 Trigger Points 7.3 Parties Acting in Concert 7.4 Tactics for Circumventing Mandatory Bid Obligations 8 Conclusion References This book investigates stakeholders' interests, market players, and governance models for the takeover market in the changing global economic orders. Authors from the UK, Germany, the Netherlands, Australia, and China discuss takeovers in the context of China as a rising power in the global M & A market and re-examine takeover as an efficient method for corporate competition, consolidation, and restructuring. China has come to embrace takeovers as a market practice and is seeking directions for further reforms of its law, regulatory model, and banking system in order to compete with other economic powers. Yet, China is at a very different economic development stage and has different legal and political structures. State-owned enterprises dominate the Shanghai and Shenzhen stock markets--a very different landscape from UK and European exchanges. Researchers and policy makers are currently developing options in response to needs for reform. Recently, China has also announced the opening of its financial markets to foreign ownership. This book reflects on the UK and European models and focuses on the policy choices for China to transform its capital market. The book is of interest to postgraduate students and researchers (LLM, PhD, postdocs), law and management/finance academics, and policy makers