The Institutional Value and Judicial Application of the Defensive Clause in the Company’s Bylaw

The defensive clause in a company’s bylaw is an important tool against takeover, but its legitimacy has been questioned by the theoretical and judicial fields, and it is manifested in complex and various forms. In terms of institutional value, the defensive clause has a significant effect on maintaining the stability of the corporate governance structure, protecting the legitimate rights and interests of the initial shareholders and the company’s funding and innovation team, ensuring the sound development of market economy, and promoting the establishment of business ethics. In the legislation on defensive clauses, the basic legislative attitude should be to fully respect the company’s autonomy, and to set the necessary limits on the boundaries of its autonomy for different kinds of defense clauses. In judicial practice, basic judicial principles, such as “company autonomy first”, substantive equality, maximizing the company’s interests, and appropriate defense and etc., should be established, to ensure that the company’s acquisition and anti-acquisition are legal and fair and in an orderly manner, under the premise of striking a balance between the social and individual benefits.