A Legal Analysis On Share Repurchases Mechanism

Share repurchases (share buyback) is considered as one of the most important issues in the field of corporate laws, not only due to its fulfillment of the worldwide capital market development, but also its relationship with such issues as capital rules, distribution forms in the company. During the last two decades, many countries introduce the concept of share repurchases by corporations. The trade volume of share repurchases has increased significantly. Many countries which already legitimize the share repurchasing activities are relaxing rules and conditions.The situation in China is on the country. It was strictly restricted in China legislation during a long time. During the recent times, share repurchase play a fundamental role in the field of stock market and corporate performance in China. In the revised Company Law, share repurchase becomes legitimated and regime is laxer. Even though there are still a lot of problems left to be discussed and solved.The study will also, on the base of comparison through history lengthways and among countries breadthwise, use the legislation and practices from countries which have mature capital market for reference, draw a personal remark and suggestion on the share repurchases mechanism in China. The remainder of this research is organized as follows: Introduction is presented in beginning, lay out and give a general view of the whole study;Chapter I is Outline of Share Repurchases. It starts with the definition and characteristic of share repurchases mechanism and provides a review of the evolution of share repurchase worldwide during the latest two decades.Chapter II is Legal Analysis of Share Repurchases. It includes motives of share repurchases, methods company use to repurchase their shares and abuse of share repurchases accompanied.Chapter III is Comparative Analysis on Legislation of Share Repurchases. It can be concluded as three sections, two modes. One is "Permitted in general, forbidden exceptional", whose representative is the USA, and another is "Forbidden in general, permitted exceptional", which is represented by EU and continental countries such as Germany and France. The study is devoted to discuss laws and regulations applying to the share repurchases activities in the selected countries. Also analyzes the legislative reasons behind the two different modes in succession.Chapter IV, which could be called the core of the paper, Suggestion for legislation on share Repurchases in China. It includes four sections. Case analysis and demonstration of share repurchases are discussed in Section I; Section II is introducing the administration of share repurchases in the existing laws and regulations. Mainly in revised Company Law and Administration of Repurchases of Public Shares by Listed Companies Procedures (Trial Implementation). Followed two sections are talking about the suggestion for legislation on share repurchases. The choice of modes and principles which should be confirmed in the laws are provided in Section III; Section IV presents suggestions on legislations through the aspects of subject and procedure.Finally, a conclusion for the study is presented.