Lu, L., ‘Chinese Takeover Law: Revisiting the Director’s Duty of Care under Takeover Defence and the Business Judgment Rule’ (2021) 32 International Company and Commercial Law Review 603-625 (with Ren, C.).
This article discusses and analyses the Chinese takeover law with a focus on the director’s duty of care under takeover defence. Directors of the target company are asked to act prudently and carefully in securing the best deal for the target company and its shareholders. However, due to the intrinsic conflicts of interest between directors and other stakeholders during the course of takeover, it remains difficult to effectively judge whether directors fulfil such duty or not, in particular when Chinese law in this area lacks clarity and comprehensiveness. The article evaluates certain drawbacks of the Chinese takeover law and then refers to the US judicial experience in this area, such as the well-known business judgment rule. It explores the feasibility of introducing the US-style business judgment rule into China based on the country’s market reality and unique legal environments.