Research On Several Legal Issues Of Split-share Status Reform

Compensation to the shareholders of outstanding shares is the way of redistributing interests. The real gains of interests will not come until the non-outstanding shares acquire the rights to go on the market-the time all the shares of listed company become fully circulating. As the achievements of previous negotiation of two groups of different shareholders, that is what market has been expecting from the reform of split status of shares in the Chinese securities market. During the trial of the reform, however, the worries arise from the scholars and experts that potential crisis may probably emerge on the market when the final interests come into realities.As one of the scenarios of the reform of split-share status, warrant has greatly met the needs of the market. Being a mature and successful derivative from abroad, warrant can be employed to serve Chinese financial market with its legal framework and product line having been localized on the background of stock market reform. The warrant market is now in its infancy in which the target of exchange is set off to gradually improve the system of administration, transaction and settlement, etc. The breakthrough is to build designated market maker and continuous issuing system.On the background of split-share status reform, the stock option was introduced as one of the scenarios of the reform too. At the time that most listed companies have initiated their reform plans, the problem come out as how to put into practice the stock option successfully and boost the overall quality of the listed company consequently, which is crucial to the reform. Stock option is a new type of derivative, functioning as market mechanism to propel the management level of the listed company. In the market of high efficiency the manager will acquire the compensation through his/her endeavor, which is the effect of incentive; whereas in the market with low efficiency, it fails because the stock price is unable to reflect the quality of the listed company. In this situation the capabilities of management team will not be assessed properly, which is detrimental to the foundation of the stock option.