On Preferred Stockholder Equity

Preferred stock,as a stock prior to the rights of common stock,it can achieve the flexibility of redeploy and management of the company capital.However,the system is not formulated by the legislation in China.The fundamental reason is the difference of the rights between the shareholders of preferred stock and the common stock,which leads to complex of the internal interests in company.From the jurisprudence perspective,the difference of the rights between the shareholders of preferred stock and the common stock is not in accordance with the requirements of the shareholders equality on the surface.However,the discrepancy of rights completely could be reasonable in jurisprudence from the analysis to the principles of the contractual nature, private right and substantial equality of stockholders' right. On this basis,through analyzing the difference of rights between the preferred stock and the common stock,the specific interest conflict of all parties in company caused by the rights of the preferred stockholder is further discussed.With the principle of stockholder equality and the method of contractual interpretation of preferred stock,the reasons that the rights such as the right to request distribution of benefits,the right to request distribution of surplus property,the right to vote, the right of reimbursement and so on cause a variety of competing for the right to control and interest of the company are analyzed.Meanwhile,some solutions are put forward to balance the interest of all parties.This paper still deeply analyzes the practice against the interest of preferred stockholder.Moreover,it discusses in detail the foreign protective system for the priority of preferred stockholder, such as revival of the right to vote,reserve and general meeting of preferred stockholder.Finally,in view of the shortcomings of practice and legislation on the preferred stock system,the suggestions that the contents of the priority of preferred stockholder and its protective system should be formulated systematically are put forward.