A Comparable Study Of StockRepurchase System

In the countries and areas where there is a mature capital market, share repurchase is an important capital operating instrument for company in different development periods and external environment. Share repurchase also has the following important functions: capital structure optimization, minority shareholders, the price of undervalued stocks boost and modern incentive system promotion. However, the system of share repurchase could be easily abused and this is in conflict with traditional company theories and will cause negative effects. This thesis analyzes the functions of share repurchase and its possible abuses and compare the laws of the major jurisdictions in the world, and then points out the tendency in the system of share repurchase now. By evaluating modification of the system of share repurchase in China, the thesis shows that the modification of share repurchase legal system is not only suitable for Chinese market but in accordance with the international practice. The share repurchase will offer an important financial tool to the company and provide great value in our capital market. However, some rules in current Chinese company law are unsatisfactory because they may cause tremendous risk and uncertainty in practice. This paper explores the legislation for share repurchase from a historical and legal perspective, and aims to find solutions to the problems. This text is divided into four chapters:Chapter 1: Analyzes the legal theory of share repurchase. It mainly introduces the definition and characteristics of share repurchase, comparing it with other related conceptions of share repurchase. And then it examines the reasons for forbidding and relaxing the share repurchase.Chapter 2: A comparison in the development of share repurchase in the countries and areas. It studies the development of share repurchase in the countries and areas of the common law system and the continent legal system, noting that the common tendency is to enlarge the applicable scope of share repurchase as shown in the countries and areas examined.Chapter 3: A comparison in legislation of share repurchase. It examines the legislation of share repurchase in the countries and areas of the common law systemand the continent law system, noting that the company law of various countries vary from forbidding moving towards relaxing,Some are expanding exceptional situation of share repurchase, while adopting other restrictions to reduce the problems.Chapter 4: Discusses the reform of legislation of share repurchase system in China. In this chapter, the essay concludes that the reform of share repurchase can have many positive impacts on our capital market and can create good environment for management of the company, although there are still some uncertainty.