Hostile takeovers as corporate governance: A legal analysis of tender offer and proxy contest in China and Malaysia

Abstract

This paper will specifically analyse from a legal perspective the applicability of tender offer and proxy contest as the most frequently used techniques in hostile takeovers in China and Malaysia. The purpose is to evaluate the adequacy of the related regulation and governance in place for companies in both jurisdictions. This paper unfortunately found that both China and Malaysia have not particularly adopted tender offer technique since in practice most hostile takeover cases were completed through mandatory offers triggered by negotiated purchases. Likewise, the existing Chinese and Malaysian laws are not supportive enough to supervise proxy contest exercises. As a result, they are losing the advantages that both techniques may offer to enhance corporate governance and promote fair competition. Both jurisdictions should consider putting on adequate laws and practices to better regulate hostile takeovers.