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Analysis of our country company merger and acquisition, and its legal regulation

Author: RenWenZuo From: www.yourpaper.net Posted: 2010-06-06 12:21:11 Read:
Keywords: the     convertible merger; legal regulation; mergers and acquisitions of listing Corporation
Abstract: the convertible merger is one of the most commonly used acquisition mode in Western countries.It not only than cash mergers and acquisitions to save transaction cost, but also can be a reasonable tax avoidance and expected stock growth effect in the financial.Therefore, since the nineteen ninties, convertible to make acquisitions have been occupying the main position in the global M & a market.Along with the reform in our country and a series of M & a stake in the completion of the new regulations promulgated, large-scale convertible merger will also in the capital market of our country is gradually activated, to build up a legal system in our country, with the wave of mergers and acquisitions has been crunch time task.
Convertible merger, also known as the stock swap merger, as the basic types of enterprise mergers and acquisitions, M & A is the corresponding concept and cash.Specifically refers to the acquisition by the Target Corp's stock according to a certain proportion of changing cost shares in the company, the Target Corp is terminated, or become acquisition of subsidiaries of the company merger and acquisition.As one of the enterprise merger and acquisition mode, in today's international society, convertible merger with cash mergers and acquisitions do not have advantages, especially has a positive effect on Financing large-scale restructuring of the company.Therefore, convertible merger has become the mainstream of the current global M & A.Along with the reform in our country and a series of M & a stake in the completion of the introduction of new regulations, from system level to clear our company merger and acquisition, obstacles, laws and regulations promulgated the newly revised or perfected legal basis of our company, the acquisition of the convertible.All this will further stimulate the stock market of our country on the convertible merger behavior.
, the acquisition of the convertible form
Convertible merger in the world is a mature equity mergers and acquisitions in the means of payment, have been widely used.In the use of all countries in the world generally include capital convertible, convertible and inventory stock crossed in three ways.To increase the exchange, namely the issue of new shares by way of the acquiring company, including common stock or convertible preferred stock to replace the original stock Target Corp, so as to achieve the purpose of acquisition.Stock exchange, acquiring company will be part of the shares of the stock to replace the shares of Target Corp, in this way have stock country often used to allow the company to.Cross exchange, namely the acquisition of the company's shareholders and the shareholders of the Target Corp mutual replacement stock, achieve the cross holding way.This approach is generally not in order to control the right to Target Corp, but in order to establish strategic partnership.
Characteristics of two, the analysis of Convertible M & A
Compared with the payment in cash, stock for stock M & A has distinct characteristics:
1 stock-for-stock avoids short-term cash outflow pressure, reduce the purchase risk.For the acquisition of the company, to achieve the purpose of M & a stock-for-stock merger companies to pay less money in the non-payment or circumstances, can from the instant the pressure to pay, and the resulting cash flow into the production and operation of enterprises after merger and acquisition, is conducive to the development of enterprises after merger and acquisition; for Target Corp, Convertible M & A can make the shareholders of the Target Corp automatically become the new company or the shareholders of the Surviving Company, can increase revenue share after the merger of enterprises.
2 convertible merger can reasonable tax avoidance.Because the transaction that transferring party got the stock, so only when its holdings when the cash is required to pay income tax, the income confirmation delay time, can delay the payment of enterprise income tax.Under normal circumstances, if the takeover by cash, controlling shareholders of Target Corp in close to 0 cash generated income tax; and the acquisition if its own stock as a means of payment, controlling shareholders of Target Corp after receipt of the acquirer to pay the purchase price of the shares do not have to pay tax, the sale of stock only when necessary the value-added component obtained by selling stock and fulfill their obligations to pay taxes, this is equivalent to a tax deferral.From the tax point of view, the stock is more welcome than the cash.
3 convertible merger can change the ownership structure of the parties to the merger.Cash payment manner does not change the original shareholders in M & A share structure of the new Merged Companies, and the main mode of convertible merger is the merger and acquisition in issuing new shares, so that ownership structure of M & A in the acquisition of the company's shareholders will change.This helps to corporate restructuring, optimizing governance structure; on the other hand, weakened may also cause M & a company the original status of major shareholders, even will lose control of the original.
4 stock-for-stock merger scale limits can break.Cash purchase usually have "feature to eat small" by large, convertible merger can get rid of the scale of capital mergers and acquisitions in the restricted to a certain extent, so it is suitable for any size of M & A.From the international M & a development trend, as more and more transaction amount of mergers and acquisitions, mergers and acquisitions from the "big fish eat small fish" mode gradually become horizontal strategic between multinational enterprise size of M & A, the stock exchange merger can greatly reduce the pressure at the time of the acquisition in cash, can truly realize the powerful alliances.
5 in addition to the above advantages, convertible merger also has some disadvantages: (1) the mergers, new shares changed its original ownership structure, resulting in the interests of shareholders "dilution", the result may even make the original shareholders lose control of the company.(2) stock issuance must be supervised by the securities and Exchange Commission and the stock exchange listing rules, issued procedures cumbersome, slow, so a rival bid time organization, so unwilling to be M & a Target Corp have time to deployment of anti-takeover measures.(3) to purchase convertible will often bring risk arbitrage, arbitrage group caused by selling pressure as well as the expected earnings per share dilution would incur the acquirer stock price decline.
three, stock for stock M & A in the development situation of in China
The true meaning of China's capital market is beginning to merge with the convertible merger with Shandong Luying electronic from Tsinghua University in 1999.In Tsinghua Tongfang convertible merger Shandong Lu Ying, the market has some listing Corporation are convertible absorption merger, the merger belonging to the pilot nature, mainly between the listing Corporation and the non-listed company.In the merge, the listing Corporation has the advantage of direct financing through the capital market, plays a more active role in the merger, merger with obvious "fish" and "powerful alliances" feature, the convertible merger less.Compared with foreign countries, China's convertible merger has not obtained the rapid development, convertible merger application of M & a market in our country is not widely.The main existing problems in the following aspects: (1) at present, book value plus method are used to determine the exchange ratio of Convertible M & A, rather than the intrinsic value of the company as the basis, to determine convertible ratio is more subjective; (2) the stock market imperfections hinder the listing Corporation between convertible merger; (3) the convertible merger in the imperfect information disclosure.
four, China's convertible merger legislation deficiency
In 2006, China promulgated the new regulations and a series of stock-for-stock closely related, such as the new amendments to the "company law", "Securities Law", "the acquisition of listing Corporation management approach" and "on the acquisition of domestic enterprises by Foreign Investors Provisions", "IPO and listing management approach", "listing Corporation securities issued management measures" etc..These laws and regulations of the rich law system in our country, to remove the most legal obstacles to the acquisition of the convertible, legal provisions on the acquisition of the convertible is also reflected in them, it should be said that with the legislation history milepost significance.In March 1, 2009, the State Administration for Industry and Commerce promulgated the "measures" the administration of registration of equity investment, investors are allowed to share, thus greatly reducing the cost for the strategic restructuring of enterprises, enterprise restructuring, reorganization provides a convenient channel of equity contribution, give full play an important role in the promotion of investment etc..In April 13, 2009 the Ministry of Finance and the State Administration of Taxation issued the "notice on several problems of tax treatment of enterprise" corporate restructuring of business income, open again for the merger and reorganization, the reorganization of the enterprise tax burden will be greatly reduced, the enterprise according to the provisions equity acquisitions behavior will be able to free.
However, with the developed countries in the world especially in the United States, China's legal provisions on the merger and acquisition, there exist many defects.First of all, the law stock-for-stock scattered, not systematic.The existing laws in China, the lack of a field command all mergers and acquisitions involving the company M & a law, law system is not mature, the lack of coordination between the various method.As a way of merger and acquisition, merger and acquisition, it is more difficult to find their own place, only scattered in some regulations, the convertible merger in the capital market position is seriously inconsistent.Secondly, the effectiveness of low level.The existing convertible merger the legislation is still in the Ministry of Commerce and the China Securities Regulatory Commission and other departments have promulgated the "measures", "rules" and other administrative regulations, rules, and regulations of convertible merger in which the proportion of very small, the authority of the greatly reduced.Finally, on the acquisition of the convertible
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