Abstract:
China's current Securities Law adopts a continuous information disclosure logic in the field of mergers and acquisitions of listed companies, designating listed companies as the primary responsible entities for M&A information disclosure, which may affect the legal liability allocation judgments regarding financial fraud. From overseas experience, U.S. securities law breaks through formal logical limitations by transferring the information disclosure obligations in mergers and acquisitions from listed companies to the actual controllers of target companies, making them bear strict legal liability. This paper recommends that China's Securities Law should similarly overcome formal logical constraints by explicitly designating the actual controllers of the target company as the obligated party for information disclosure when the listed company issues shares to acquire assets. These controllers should be incorporated into the regulatory framework for issuers and held accountable under fraudulent issuance provisions. As for the listed company and its directors and senior executives, they should be assigned continuous information disclosure obligations, bearing legal liability only when they fail to exercise due diligence in detecting financial fraud by target companies or when they neglect to promptly implement effective remedial measures after becoming aware of such fraud.
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