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A Study On The Distribution In The Corporate Law

Posted on:2003-06-24Degree:DoctorType:Dissertation
Country:ChinaCandidate:H Y QiuFull Text:PDF
GTID:1116360065961255Subject:Civil and Commercial Law
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This dissertation is talking about the Dividend and the Distribution in, the Corporate Law. The whole article is divided into six chapters.Chapter one describes all the forms of Distribution and Dividends, which include cash dividends, property dividends, a purchase, redemption, or other acquisition of shares, a distribution of evidences of indebtedness or promissory notes of the corporation, and shareholder dividend options. The character of each form of dividends has been analyzed.Chapter two illustrate the conflicts on the dividend policy among the stakeholders-Shareholders, Creditors, Directors, Employees and the Government. The conflicts can be classified into following categories, "Dividends weaken the capital", "Dividends dilute the creditor's right", "Wage reduce the profit", "The shareholder's preference", "Taxation", "Social cost", "Protection to the minority shares", etc.Chapter three provide the possibilities of introducing the notion of "contract freedom" to solve the above-mentioned conflicts. There are many mechanics can be used, such as the preference share, the redeemable preference share, convertible preference share, the income bond, the Anti-dilution clause, the protection against dilution, mandatory dividend, convertible preference bond, participating preference share, etc. However, in the contract freedom, some stakeholders, such as creditors, minority shareholders, suffer from significant information imperfections and negative externalities. In this chapter, we also point out the difference nature between the initial charter and the charter amendment. The trade creditors and minor creditors involuntary creditor have little chance to use the contract freedom when they incur the high transaction cost.The fourth chapter highlights the Distribution in the Revised Model Business Corporation Act. After comparing with tlie similar institution in German, France, E.U. and Japan, I concluded that the legal intervention to the dividend policy is necessary to overcome the information imperfections and negative externalities. However, there are two kinds of different legal intervention model. One kind of legal mandatory focuses on the financial rations, such as equity insolvency test, balance sheet test, liability/asset ratio, and cash flow test. Another kind of legal mandatory focuses on the "Stated capital" and fixed-ratio reserves fund. I pay much attention to the issue of "Which part of the value can be distributed". There will be different answers to this question". The answer may be "profit", "after-tax profit", "earned surplus", "capital surplus", "capital", and so on.In chapter five, we discuss the Distribution and Dividends in the Corporation Law in China. And then, we point out that the excessive mandatory in China has caused the inefficiency. Many transaction can not be made in the present legal system, especially in the recapitalization. Therefore, the applicability of the Corporate Law is weakened.Chapter Six give some advises on that how to improve the distribution institution in China. I hold that the shareholders should be given more freedom on choosing the dividend policy, and they should be allowed to distribute not in proportion to their capital contributions. There should be more enabling provisions other than mandatory provisions. The Judge should have more discretion power. The remedies to the victim should be improved. The ratio of the statutory common reserve fund should be decreased. The statutory common welfare fund should beabolished.In the ending of my dissertation, I emphasize that there should be more freedom in the corporate Law. At present, it is important for Chinese scholars to recognize the corporation, and the enterprise as the nexus of contract a creature of contract other than a creature of government regulation, or a creature of legal mandatory.
Keywords/Search Tags:Distribution
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