A Legal Study On Class Shares

Class shares are shares issued by the company that carry different rights.In the context of the modernization and liberalization of the company law,the issuance of class shares by companies has become a common tool for financial innovation in the capital market,and countries have gradually adopted legislation to recognize and grant companies more autonomy in issuing class shares.Most of the Common Law countries have established a relatively mature class share system.In addition to the legislation stipulating that companies are allowed to issue various types of shares related to profit distribution,residual property distribution,voting rights,and director selection,repayment,conversion,etc.In addition,companies are even allowed to freely create share classes within a larger autonomy.The Civil Law system class share system started relatively late,but more and more countries have gradually relaxed controls and enriched the capital structure of companies.Class stocks play an important role in the capital market.They can broaden the financing channels of distressed companies,optimize the company's financial structure,reduce financing costs,meet the needs of different types of investors,achieve a substantial balance of rights,and prevent hostile acquisitions.Ensure the stability of company control.my country's class share system legislation is still in its infancy,but judging from the current commercial affairs,a large number of transactions and disputes related to class shares have appeared.Therefore,it is imperative to establish a complete class share system.This article is divided into the following five parts:Chapter One: General Theory of Class Shares.Class stocks are for companies that only issue standard common stocks with uniform standards,and each share corresponds to the same property rights and participation rights.It means that there are two or more different types within a company with different correspondences.Shares with or without rights,scope of rights,or order in which rights are exercised.Class stocks have a special dual attribute that spans equity and debt.When researching class stocks,it is also necessary to follow two different paths of company law and contract law.The emergence of class shares reflects the heterogeneous needs of heterogeneous shareholders.Although it seems that the rights of different types of shareholders are not equal,this apparent inequality is actually a manifestation of substantive equality: all shareholders can negotiate on the basis of autonomy and equality of will,which is a typical example of shareholder rights within the company.The arrangement of the division,transfer,and exchange of the contractual bundle of rights embodies the value of shareholder autonomy and contract freedom.Only by fully respecting the basis of equal negotiation and autonomy can we achieve a more efficient allocation of shareholder rights and comply with the company law.The pursuit of creating value and promoting efficiency.Chapter Two: Classification of the types of shares.This chapter analyzes the classification of shares based on the transaction needs in practice,and discusses and compares the legislative practices of different countries and regions,including my country.In the process of analyzing the legal and economic methods of class-share financing transactions,it explores the needs of investment and financing parties to reduce transaction costs and guarantee transaction returns in transactions,so as to clarify the supply direction of the company law in the class-share system.When a company conducts equity financing,both investment and financing parties will face information asymmetry risks,valuation risks,moral hazards,and adverse selection risks.Both parties must spontaneously look for ways to prevent,reduce,and resolve risks to form a relationship contract.Ways to further reduce transaction costs.Based on this transaction demand,different types of shares have been formed,including earnings distribution shares,residual property distribution shares,voting or other control-related shares,convertible shares,and redeemable classes Shares.Legislators should deepen their understanding of real transactions,identify the transaction needs of both investment and financing parties,and further fix the effective relationship contract that is spontaneously formed in the transaction through legislation.Chapter Three: The protection mechanism of class shareholders.Although the classes of shares are based on the heterogeneity of shareholders,there will still be conflicts of interest between shareholders of different classes.Compared with ordinary shareholders,special shareholders are often a disadvantaged group in the company.When the interests of disadvantaged shareholders are harmed,the law must provide perfect relief methods.Improving the class share contract,classifying voting system,improving the right of dissent evaluation,reviving the voting right system,and further improving the fiduciary obligation can resolve conflicts of interest between class shareholders from different aspects,and provide more effective solutions to relatively weak class shareholders protection.Chapter Four: Choice of Legislative Path: Autonomous Authorization of Constitution and Compulsory Legislation of Company.When constructing a class share system in our country,we should start from different company types and provide differentiated systems for the needs of different companies.For listed companies,it is advisable to adopt the legislative path of class legal class shares.For non-listed public companies,it is necessary to consider their characteristics between publicity and closedness,provide optional sub-rights within a limited range determined by law,and allow companies to combine these sub-rights within this range Arrangement,and create limited shares that meet your needs within the scope permitted by law.For closed limited liability companies and closed joint stock limited companies other than listed companies and unlisted public companies that exist in reality,company autonomy should be fully respected,and different types of shares and rights should be agreed in the company's articles of association.Chapter Five: The design of the class share system in the Chinese company law.This part explains the system concept of class shares,and further details how to design class shares system in closed companies and public companies on the basis of Chapter 4.The establishment and improvement of the class share system is by no means only a special allocation of the content of shares,it also involves the improvement of a series of supporting systems,and even the fundamental revision of the company law,except that the company's capital composition is more complicated than before.It will also have an impact on the corporate governance structure.At the same time,the concept of corporate law will also be updated accordingly,and will correspondingly affect the change and improvement of a series of corporate law systems such as the capital system and the division of company types.