Anti-takeover clauses in AOA: where is the red line?

The listed company “AOA War” recently spread to the A share market. For listed companies, the insertion of anti-takeover clauses in their articles of association (AOA) is the most economical and effective means of fending off takeovers. However, some anti-takeover clauses, while increasing takeover costs and difficulties for potential acquirers, also come up to a hair’s breadth from the red line drawn by the law, and with everyone getting in on the act, the lower boundary is constantly being pushed lower.

AOA autonomy. Company autonomy is the cornerstone of Company Law theory and practice, with its major manifestation being a company’s AOA. The new Company Law expands the autonomous space of a company’s AOA.

A company can make tailored revisions to its AOA. However, company autonomy must be carried out within the framework of the law. Its AOA may not run counter to mandatory norms of laws and regulations, and is required to conform with relevant provisions of the Administrative Measures for the Acquisition of Listed Companies, and the rights of shareholders must not be restricted in the name of “autonomy”. These two issues are the precondition for company autonomy.

Jiang Fengtao is the managing partner and Liu Bing is a partner at Hengdu Law Firm