Paper Keywords Shareholder Share Repurchase Company Law
I. Overview of the company's share repurchase system
(A) the concept of stock repurchase
Stock repurchase refers to the behavior of a listed company to buy back a certain number of shares issued by the company from the stock market in cash. After the stock repurchase is completed, the company can cancel the repurchased shares and keep them as "treasury shares". Stock repurchase is a behavior between listed companies and shareholders, a way to adjust the company's capital structure and stock circulation in the market, which will have a certain impact on shareholders and the company.
(B) the necessity of legislative regulation of stock repurchase
Judging from the historical track of the legislation of share repurchase of companies in various countries, the legislation of most countries has generally gone through the process from no explicit provisions to exceptions, and the legal norms have also changed from precedents or simple general provisions to detailed provisions. In China, share repurchase is a new thing, and the relevant legislation and regulations are not perfect. In view of the problems existing in the legislation of share repurchase in China, China needs to intensify the efforts to improve the legislation of share repurchase.
In China, in order to solve the unreasonable ownership structure problems such as excessive proportion of state-owned shares and insider control, share repurchase was introduced in the 1990s. In May, 2005, China Securities Regulatory Commission publicly solicited stock repurchase methods in an attempt to solve the dilemma of non-tradable shares. On June 16, 2005, the CSRC promulgated the Administrative Measures for the Repurchase of Public Shares by Listed Companies (Trial), which provided the corresponding code of conduct for the stock repurchase of listed companies. The company law has also been revised, providing a good legal environment for the smooth implementation of stock repurchase.
As a capital operation mode to adjust the company's equity structure and capital structure, stock repurchase is of special significance to listed companies in China. Perfecting the legislative regulation of share repurchase can provide legal protection for the unique problems of listed companies and stock market in China. At the same time, there are also various problems in the process of stock repurchase of listed companies, such as the reduction of registered capital of listed companies, related transactions between joint-stock companies and controlling shareholders, and the damage to the interests of minority shareholders. The existence of these problems makes it necessary to improve the legislative regulation of share repurchase in order to solve the practical problems.
Second, the development and current legislation of corporate share repurchase in China.
(A) the development of stock repurchase in China
In the process of China's economic development, the planned economy is dominant, almost all enterprises are state-owned, and the joint-stock company is the main form, so there will be no stock repurchase. However, with the implementation of China's reform and opening-up system, the level and mode of China's economic development have been continuously improved. In order to conform to the trend of economic development, China enterprises have carried out the shareholding system reform, and the scale of the securities market has also been expanding. In view of the new things in the operation of the securities market, China's laws have also made relevant provisions, especially for stock repurchase.
The stock repurchase of listed companies in China began as early as 1992, that is, Dayuyuan repurchased all the shares of Xiaoyu Yuan by agreement, the issuance of B shares after the Lujiazui agreement in 1994, the case of Guo Mao's capital reduction in 1996, 1999, Yuntianhua and Shenneng's partial state-owned shares repurchased successfully into securities. In 2005, driven by the share-trading reform of listed companies, the promulgation of "Administrative Measures for Repurchase of Public Shares by Listed Companies (Trial)" and the revision of the corresponding contents of the Company Law made the stock repurchase develop again, and Hangang became the first company to repurchase tradable shares, followed by many stock repurchase cases. This capital operation mode is developed under the increasingly good domestic policy environment.
(B) Review the legislative defects of share repurchase of Chinese companies.
As can be seen from the provisions of the above laws and regulations, China's current provisions on stock repurchase are only general and principled provisions, which are relatively general and general, and the operability is not strong. Relevant supporting laws and regulations, implementation rules or specific operation methods have not been promulgated. In the face of the current stock repurchase cases, the construction of laws and regulations seems to be somewhat lagging behind. The scope of application of stock repurchase is too strict, which violates the development trend of international legislation and limits the development space of listed companies. Some definitions are also vague, which will encourage evasion of the law and make the provisions ineffective. If the system is not standardized systematically, the disadvantages of the system itself will gradually emerge, which may become an obstacle to perfecting the corporate governance structure in China. Therefore, in order to meet the actual needs of China's capital market, eliminate the legal obstacles of share repurchase, realize the rapid development of the company and protect the legitimate rights and interests of minority shareholders, China must establish a sound legal system of share repurchase as soon as possible.
Three, some suggestions to improve the legislation of share repurchase in China.
(A) improve the information disclosure system
The basic characteristics of modern enterprises are the separation of ownership and management rights, in which investors enjoy ownership and operators enjoy management rights. So operators have certain advantages in obtaining commercial information. If operators pursue their own interests, they may distort or not disclose relevant information. If corporate governance is not perfect, insider trading may occur in stock repurchase. Therefore, perfecting the information disclosure system is an important link.
(B) to strengthen the protection of stakeholders
Due to the information asymmetry in the capital market, small and medium shareholders are at a disadvantage in mastering information and have minority voting rights at shareholders' meetings. There is information and interest asymmetry between major shareholders and minority shareholders, and minority shareholders can only passively accept the stock repurchase program. Therefore, we should start from the following three aspects to ensure that the interests of minority shareholders are not infringed: first, improve the information disclosure system of share repurchase, so that all stakeholders can grasp information resources relatively fairly; Second, interest compensation measures for dissenting shareholders' creditor's rights; Thirdly, to redesign the voting rights of the stock repurchase program, not only the quorum under the principle of "one share, one right" should be reached, but also the consent of most minority shareholders, at least two thirds of the related shareholders of listed companies should abide by the avoidance system, and non-related shareholders should vote independently on stock repurchase matters. In addition, it is better for listed companies to buy back shares by offer, because it can highlight equality and will not be biased towards major shareholders or controlling shareholders. The price of repurchase should be determined according to the market price and performance of listed companies, and the interests of minority shareholders should be protected by determining reasonable prices.
For the protection of creditors' interests, it should be stipulated that the company needs to seek the opinions of creditors before repurchase, and the company can obtain the consent of creditors by providing guarantees for creditors or raising interest rates, or let creditors participate in the formulation of repurchase plans and their one-vote veto power.
(3) Define the applicable conditions.
First of all, from the external environment of share repurchase, it must be carried out when the company's share price is relatively low. If the capital market is active and the company's shares are reasonably positioned or even overvalued, listed companies will lose their enthusiasm to buy back their own shares. Secondly, listed companies must have enough cash or good cash flow and a lot of idle cash or cash flow, so that the company's repurchase of shares will not affect the company's own normal operation. In order to protect the interests of minority shareholders, the following conditions can be clarified: (1) If minority shareholders have objections to the stock repurchase, they can notify the company in writing to raise objections to the matter; (2) Shareholders may indicate their intention to purchase their shares; (3) Vote against the proposal at the resolution of the shareholders' meeting. At the same time, different conditions should be stipulated for repurchase behaviors with different repurchase purposes. In practical application, it is necessary to formulate implementation rules and observe whether the company has the conditions for stock repurchase from the company's financial statements.
(4) Improve the relevant provisions of the Company Law on stock repurchase.
In addition to the above measures, China's company law can also be improved from the aspects of stock repurchase methods, prices, sources of funds, applicable objects, etc., as follows:
1. Share repurchase methods: The share repurchase methods listed in the Guidelines for the Articles of Association of Listed Companies should be further clarified. For example, the way of agreement repurchase is very suitable for the repurchase of non-tradable shares.
2. The price of share repurchase: Because there are state-owned shares and tradable shares in our country, and the dual-track system is implemented, it is necessary to distinguish the determination of the repurchase price of the two. For state-owned shares, the benchmark of share repurchase price should be the intrinsic value per share, and the intrinsic value of state-owned shares is equal to the net asset value of state-owned shares plus premium; For tradable shares, the repurchase price is generally determined by a certain multiple of P/E ratio (P/E ratio refers to the ratio of share price to earnings per share in an investigation period (usually 12 months) or the market price, average price or highest price in a certain period.
3. Applicable object of stock repurchase: At present, China's stock repurchase does not include subsidiaries in management, so China's company law should stipulate that subsidiaries should also apply the restrictions on stock repurchase when purchasing shares of the parent company.
Four. conclusion
The stock repurchase system comes from the mature capital market, which provides a new development direction for the company to adjust its capital structure and improve its operation mode. With the vigorous development of China's securities and financial market, stock repurchase is increasingly sought after by China companies, which has played an active role in preventing insider trading, hostile takeover and protecting the interests of minority shareholders. Based on this consideration, we can find that the legal protection of stock repurchase is not perfect, and it is difficult to give full play to the potential of this system. Therefore, we should improve the system more pertinently-refine the method of price determination, improve the repurchase procedure and strengthen information disclosure to eliminate some unfair phenomena. Whether the repurchased shares should exist in the form of "treasury shares" or in other forms remains to be further studied, at least on the premise of perfecting the traditional legal system. Although the improvement of the existing legal system will conflict with relevant principles, such as the three principles of capital and the rules prohibiting the withdrawal of capital contribution, a perfect system should be considered as a whole and should be able to conform to the development of China's socialist market economy. With the continuous development of the economic base, the legal superstructure should also be constantly improved, so that the China stock market can develop more healthily and steadily.