Both Australian company law and Chinese company law have been dramatically changed in the last decade and are still being changed. The CLERP Act 1999, which came into force on 13th March 2000, made significant changes to the Corporations Law (CL). While the Securities Law of China, which commenced on 1st July 1999, is a milestone in the development of Chinese company law. Both the CLERP Act of Australia and the Securities Law of China changed the takeover provisions in respective jurisdictions. This short essay is to outline these changes and their impacts and interactions.
CLERP Act 1999: takeover law reform and its impacts in Australia
The takeover legislation in Australia can be traced back to the takeovers code introduced by the Uniform Companies Code in 1961. This legislation was significantly revised in 1971 with the introduction of the Eggleston Principles. The Eggleston Principles was subsequently carried forward into the Companies (Acquisition of Shares) Act 1980, and the provisions of this legislation were largely re-enacted in CL.
Before the CLERP Act was enacted, CL had been changed more than a dozen of times, but takeover provisions were almost the same although the Simplification Task Force had planned to reform them relating to relevant interests, associate relationships and entitlements.(1) After the CLERP replaced the Corporate Law Simplification Program, the endeavour to reform the takeover provisions continued, and the emphasis was moved to facilitate a more efficient market for corporate control because the objective of the CLERP was "to ensure that business regulation is consistent with promoting a strong and vibrant economy and provides a framework which assists business in adapting to change".(2) The CLERP brings an economic focus to corporate law reform. As a part of the CLERP, takeover law reforms accordingly were designed to achieve an appropriate balance between facilitating efficient corporate control while ensuring a sound investor protection regime, particularly for minority investors.
The CLERP Act has repealed the whole of Chapter 6 of CL, and inserted new Chapter 6 together with Chapters 6A, 6B, 6C and 6D, of which Chapter 6 deals with the acquisition of shares and takeovers, Chapter 6A deals with compulsory acquisitions and buy-outs. Chapter 6 begins with the purposes of the takeover rules with Eggleston Principles incorporated. It also extends takeover regulation to listed managed investment schemes and listed bodies. The main reforms are summarised as follows.
The CLERP Act makes the Corporations and Securities Panel the primary forum for the resolution of takeover disputes during the bid period. All interested parties may bring matters before the Panel, not just the ASC. Any aggrieved party has a right of appeal from a Panel decision to an appeal division of the Panel. The Panel is empowered to make a declaration of unacceptable circumstances having regard to the public interest, and to review ASIC's administrative decisions.
Before the reform, the courts were the principal forums for resolving takeover disputes. Targets in hostile takeover bids often resorted to litigation that can result in bids being delayed, sometimes for tactical reasons. And the court proceedings arguably were used as a method of creating financial disincentives for takeovers to proceed. The advantages of an effective panel for dispute resolution are obvious. A Panel comprised of experts in the field will make decisions quickly and efficiently. The removal of the capacity of the court to grant injunctions other than on the application of the ASC will remove the major source of current tactical litigation. And the Panel applying a single standard instead of the different approaches taken by different judges also can minimise tactical litigation.
Before the reform, a compulsory acquisition is available only when 75% by number of the outstanding shareholders sell their shares during the bid. If the takeover relates to a particular class of shares then it is only the remainder of that class that may be acquired. Now, compulsory acquisitions can be made for all class of securities. The 75% rules are changed to be based on the value of shares subject to acquisition under the takeover, rather than numbers of shareholders. This overcomes the problem of a single shareholding being distributed among several people to deliberately increase the number of shareholders to oppose the bid.
In addition, a person who has relevant interests in at least 90% by number of the securities in that class is able to achieve 100% control of that class. This helps companies overcome any limitations on acquisitions flowing from the Gambotto(3) decision. If 10% by value of the minority holders of any class dissented, the acquisition of that class would only be able to proceed with court approval of the fairness of the price.
This reform is designed to make takeover easier and prevent greenmail, and will result in better and more efficient management of company groups and reducing the administrative and reporting requirements of associated companies. Where a parent company has compulsorily acquired outstanding minorities, there is more flexibility in distribution of funds between subsidiaries, the confidential information is better protected and conflicts of interest in dealings between group companies are avoid. However, it is also criticised as both unfair and unnecessary for hurting minority shareholders.
The CLERP Act also makes significant reforms on the disclosure requirements for takeover offers. The disclosure rules are consistent with the fundraising disclosure rules and have regard to the extent to which reliable information is available and useful. A bidder has liability to make supplementary disclosures. The procedure rules relating to off-market bids and market bids are brought into line. Part A and Part C statements are merged into a bidder's statement and a target's statement replaces Part B and Part D statements.
It is worth noting that the most striking and radical of the CLERP's proposals for takeover law reform was to introduce a mandatory bid rule. Acquisitions that would exceed the statutory threshold 20% would be allowed as long as that the acquisition was immediately followed by the announcement of a full takeover bid. The bid would be unconditional and for cash of an amount at least equivalent to the highest price paid by the bidder in the last four months.
The CLERP believed that there were potentially significant benefits associated with introducing a mandatory bid.(4) It would promote certainty in the takeover process, cut down the bid costs for removal of an auction and smooth the bid process for minimisation of directors' defensive behaviour. It was expected that more bids would take place as a result of greater certainty of outcome, providing greater incentives for efficient management under the increased prospect of a takeover.
However, it was inconsistent with the first three Eggleston Principles, and the removal of an auction would result in some reduction of market transparency. It would also harm the target shareholders because they would be forced to accept the same price that was offered in private negotiation. At last, the mandatory bid proposal was deleted from the CLERP Bill when it was opposed in the Senate.
The reforms are potentially very important to the shape of takeover law and company law generally. As takeover is much easier and more efficient than before, the reforms also will promote efficient management and confident market, which will ultimately lead to greater wealth creation and better competitive capacity in globe market.
Securities Law: takeover law reform and its impacts in China
As a securities lawyer identified by China Securities Regulatory Commission (CSRC) and Ministry of Justice, I am more interested in what has happened in China and what should China adopt the Australian experience for her own securities markets related to takeovers.
After the socialization in later 1950s, shares were disappeared in Mainland China.(5) But under the "open-door" policy, shares were re-emerged in China in 1983.(6) Before Shanghai Stock Exchange was established in December 1990, securities were traded on counter in major cities under government supervision.(7) After the foundation of Shanghai Stock Exchange and Shenzhen Stock Exchange,(8) securities trading on counter was no longer legal and all securities should be traded in stock exchanges. There was no nationwide securities regulation until Interim Provisions on the Management of the Issuing and Trading of Stocks (Interim Provisions) was issued by the State Council on 22 April 1993. Chapter 4 of the Interim Provisions focused on listed company takeovers. In the same year, the Company Law was finally promulgated 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 Article 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 the substantial holding provision in section 671B CL. The limitation is loosened greatly compared to the Interim Provisions. In the Interim Provisions, if a person possesses 5% shares of a listed company, he should stop trading within 3 days to report and disclose whenever his possession is increased or decreased by 2% of the total shares in the company.
Article 87 provides that if a bidder has held more than 90% shares in a company when the bid period is expired,(12) other shareholders who did not accept the offer are entitled to sell their shares to the bidder with the same conditions stated in the bid. It is similar to the compulsory buy-out provisions in sections 662C CL, but there is no compulsory acquisition in the Securities Law. In practice, it is almost impossible that a person holds 90%, because according to Article 86, if a bidder holds more than 75% shares of the total, the listed company shall stop listing. In order to keep the company listed, a bidder will not hold more than 75% shares.
In China, there was a committee under CSRC to deal with disputes arising from the securities market. But it was criticised because only judges and arbitrators have the right make a judgement over civil disputes. So the committee was dissolved and the power was returned to the courts.
Conclusion
Legal changes are always accompanied with the growth in the size of markets and the increase in corporate activity. Compared to the securities markets in Australia and other developed countries, the securities market is very young in China, and compared to the complex CL, the Securities Law is also very simple.(13) The Company Law and the Securities Law of China is just like summaries of CL. On one hand, because the market is not mature, it is necessary that the Securities Law leave more space to CSRC to develop the market rules to adapt to the changing circumstances. On the other hand, too simple rules cause more uncertainty that will impede the market development.
In the past few years, there was a new worldwide takeover trend covered almost all industries. Both Australia and China should try to keep up with it. Since takeover legislations and takeover strategies are used in similar ways in different countries, it is easy to China to adopt some Australian experience. China should improve the efficiency of the market while encouraging better management and enhancing investor protection, and achieve an appropriate balance between them. The mandatory bid proposal is quite good to make an easier and more efficient takeover, the provisions that a listed company may be taken over by agreement make takeover much easier than the mandatory bid, but it is also more opaque and more unfair. In my opinion, if it is supplemented with some useful rules from the mandatory bid rule, it will be better. The Panel contributes more to the efficiency, and sufficient disclosure is crucial to equability and market confidence, hence, they should be adopted with some amendment to improve securities laws and regulations of China. In addition, the simple Securities Law should be refined or supplemented by more detailed provisions to make it more certainty. It should be taken into account to adopt some other Australia experience as well as the new reforms.
Footnotes
1.The Simplification Task Force, "Takeovers", 23 January 1996
2.CLERP, Policy Framework
3.(1995)182 CLR 432
4.CLERP Proposals for Reform: Paper No. 4, Takeovers, Corporate control: a better environment for productive investment
5.China is consisted of four parts: the mainland, Hongkong, Macau and Taiwan. This essay only refers to Mainland China(China).
6.The Joint Investment Company in Baoan County, Shenzhen issued the first public share certificates in 1983.
7.The trading-on-counter markets were called "Trading Centres" in China.
8.They are the only two stock exchanges in China, and will be merged in near future.
9.It was passed on 29 December 1993 and came into force on 1 July 1994.
10.In China, there are no different classes of shares other than ordinary shares.
11.Article 81, Securities Law
12.In China, a takeover bid must last for not less than 30 days and not more than 60 days: Article 83.
13.The Securities Law contains 224 articles, of which only 17 articles regulate takeovers.
Bibliography:
1.Legal Committee of the Company & Securities Advisory Committee, Compulsory Acquisitions Report, January 1996;
2.The Simplification Task Force, "Takeovers", 23 January 1996
3.CLERP, Policy Framework
4.CLERP, Policy Reforms;
5.CLERP Proposals for Reform: Paper No. 4, Takeovers, Corporate control: a better environment for productive investment
6.CLERP, Commentary on Draft Provisions;
7.H Ford, R Austin and I Ramsay, An Introduction to the CLERP Act 1999, Australia's New Company Law, Butterworths, 2000
8.R Levy, Takeovers: Law and Strategy, LBC, 1996
9.P Little, Law of Company Takeovers, LBC, 1997
10.Jennifer Hill; "CLERP: What it Means for Corporate Australia", (2000) 1 Australian Company Secretary 18;
11.R Tomasic, J Jackson and R Woellner, Corporations Law: Principles, Policy and Process, Butterworths, 3rd edition
12.K Santow, CLERPing the Panel, (1999) 10 November paper given at Centre for Corporate Law and Securities Regulation, University of Melbourne
13.S Hirst and L Law, CLERP and Takeover Disclosure Regulation, (1999) 17 CSLJ 307
14.R Tomasic and J Fu, The Securities Law of the People's Republic of China: An Overview, (1999) 10 AJCL 268
15.T L Hong, Corporate Law Reform in the People's Republic of China, (1999) 10 AJCL 238
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杨春宝一级律师简介
杨春宝一级律师，大成上海高级合伙人、资本市场部主任、国资基金研究中心主任，大成中国区私募基金专业带头人、科技与文化法律研究中心联合牵头人。执业30余年，长期从事私募基金、投融资、并购重组法律服务，尤其对对赌研究颇深且具有非常丰富的实战经验，并专注于金融机构股权投资业务。2004年起多次入选The Legal 500"私募基金"和"公司与商业"等境内外各类律师榜单，代理的中国法院首例适用外国法律审理外国公司的董事损害小股东权益纠纷案入选上海高院发布的《上海法院域外法查明典型案例》和威科先行"要案头条"。入选上海涉外法律人才库、上海市司法局鼎新法治人才库、上海国有企业改制法律顾问团，具有上市公司独立董事任职资格，系多家知名高校的兼职教授或兼职研究生导师及上海市商务委跨国经营人才培训班讲师。出版《私募股权投资基金风险防控操作实务》等16本投融资法律专著。了解更多常见法律问题
澳大利亚收购争议解决机制有何重大改革？
澳大利亚CLERP法案将收购争议的主要解决平台从法院转向公司证券小组（Panel），这是收购法律改革的核心变化之一。法律概念与规则上，专家小组被定位为竞价期间收购争议的首要裁判机构，所有利益相关方均可申请启动审查，而不限于证券监管机构。小组有权基于公共利益对不当行为作出宣告，并可审查监管机构的行政决定。这一机制体现了行政专业裁决优于司法诉讼的立法取向。在案件事实与实务场景中，改革前目标公司常利用诉讼拖延收购进程，甚至以法院禁令作为战术武器，增加收购方的财务成本。CLERP法案通过限制法院颁发禁令的权限，仅保留在监管机构申请时方可介入，从而有效阻断策略性诉讼。同时，专家小组由并购领域专业人士组成，决策速度快且标准统一，避免了不同法官对同类案件作出分歧裁决的弊端，显著提升了争议解决的确定性和效率。实务指引与风险提示方面，参与澳大利亚收购交易的当事人应熟悉小组的审查程序和时效要求，及时收集证据并主动提交申请。由于小组裁决仍可上诉至其内部上诉庭，当事人需评估行政救济与司法审查的衔接节点。值得关注的是，小组模式并非完全排除法院管辖，涉及刑事或重大民事赔偿问题仍可能回归司法渠道，因此收购方在制定交易策略时，既要善用小组的高效裁决机制，也要防范监管机构介入引发的不确定性。
强制收购规则在改革前后有何变化？
强制收购规则的核心变化在于门槛计算基准及适用范围。从法律概念与规则看，改革前强制收购权仅在收购方获得75%以上股东（按人数计算）出售股份时才能触发，且仅针对同类股份的剩余部分。改革后，门槛改为按拟收购股份的价值比例计算，即75%的价值比例即可触发强制收购，同时该规则扩展适用于所有类别的证券。此外，持有某类证券90%以上相关权益的收购者，可实现对该类证券的100%控制，而若10%的少数股东（按价值计算）反对，则须经法院审查收购价格的公平性后方可继续。案件事实与实务场景中，旧规则存在明显漏洞：大额股东可能将持股拆分至多人名下，人为增加股东基数以阻挠收购。价值标准则有效抑制了此类规避行为。文章指出，该改革吸取了Gambotto判例的教训，旨在消除母公司整合子公司的法律障碍。强制收购权使公司集团内部资金调剂更灵活、商业秘密保护更严密，并减少关联交易中的利益冲突，有利于提升集团管理效率。然而批评者认为，强制收购对少数股东可能不公，尤其是强制其接受不确定的定价。实务指引与风险提示方面，收购方须严格计算触发门槛的时点及价值认定方式，避免因统计口径差异引发争议。少数股东在面对强制收购时，应关注反对权的行使期限及法院批准程序的具体要求。由于价值评估具有专业性和主观性，建议在交易文件中对公允价值确定方法作出明确约定，并保留独立第三方估值报告，以降低后续司法审查的不确定性。
强制要约规则因何被否决？
强制要约规则曾是CLERP改革中最激进的提案，最终因原则冲突和制度反对而未获通过。从法律概念与规则看，该规则拟允许投资者在持股比例超过法定阈值20%时继续增持，但条件是该收购必须立即伴随发出全面的收购要约，且要约须为无条件现金支付，价格不得低于要约方在过去四个月内支付的最高价。这一设计的初衷是简化收购程序、降低竞价成本并减少目标公司董事会的防御行为。案件事实与实务场景中，支持者认为强制要约规则能够提高交易结果的确定性，从而激励更多收购活动，倒逼管理层提升经营效率。然而该规则与澳大利亚传统的Eggleston原则存在直接冲突。原则强调收购应给予股东公平机会、确保信息平等以及避免对目标公司控制权的不当变更。强制要约允许收购方通过私下谈判先行获取股份，再以统一价格向其余股东发出要约，实质上剥夺了股东在拍卖环境中获得更高溢价的可能性，也降低了市场透明度。在参议院审议时，该提案遭遇强烈反对，最终被从法案中删除。实务指引与风险提示方面，这一否决过程表明澳大利亚立法者在效率与公平之间更倾向于保护少数股东权益。对于跨境收购方而言，若计划修订控制权变更条款，需充分评估目标地法律中关于股东平等待遇的强制性规范。即使强制要约规则未获通过，20%的触发线仍构成收购行为的重要监管节点。交易者应当谨慎设计分步收购方案，避免因触及阈值而被迫履行全面要约义务，同时需关注改革中其他披露要求对交易时间表的影响。
以上内容仅供参考，不构成法律意见。如需专业法律服务，请联系杨春宝一级律师：chambers.yang@dentons.cn
