Squeeze-out transactions arecontroversial as the controlling shareholders may expropriate the minorities’shareholdings at unattractive prices. Existing scholarship has focused on theoptimal approach towards regulating such transactions in the US and the UK,which have widely dispersed public shareholdings, but little attention is placedon jurisdictions with concentrated shareholdings, which may necessitate adifferent approach given that the prospects of expropriation are very high.This article fills the gap by examining Hong Kong and Singapore, which haveconcentrated shareholdings. Notwithstanding the fact that they have adaptedtheir corporate and securities laws from the UK, Hong Kong ultimately providesgreater minority shareholder protection than Singapore. We present empirical evidencethat the differences in regulation have led to a smaller number of squeeze-outsbut higher premium payable to minority shareholders in Hong Kong, as comparedto Singapore. However, Hong Kong firms experience higher levels of relatedparty transactions prior to the squeeze-outs, which represent another form of tunnelling.We explain that the differences in regulation and discuss the normativeimplications of our findings. Our study contributes to the broader literaturethat “law matters” and provides case studies of how interest group politics shapethe evolvement of laws and regulation.
Squeeze-outs, delistings, going private transactions, controlling shareholders, takeovers; Hong Kong; Singapore
Journal of Corporate Law Studies
Taylor & Francis (Routledge): SSH Titles - no Open Select
WAN, Wai Yee; CHEN, Christopher C. H.; and ZHANG, Wei.
Regulating squeeze-outs techniques by controlling shareholders: The divergence between Hong Kong and Singapore. (2017). Journal of Corporate Law Studies. 1-32. Research Collection School Of Law.
Available at: http://ink.library.smu.edu.sg/sol_research/2229
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