Foreign Experiences To Develop Practical Significance Of The Preferred System

Preference Share is a special type of stock issued by stock company. Usually, it carries a dividend and has priority over common stock in the payment of dividends and upon liquidation of the company. Preference share is safer than company's common stock and more profitable than company's common security. Preference share is irreplaceable, as the market needs it in large. The preference share is very common in western countries and the law and regulations on preference share are also clear and explicit. However, the concept of preference share has not been accepted and adopted in China, especially, China Company Law doesn't give preference share a legal status.Currently, the type of preference share exists in almost every important Stock Exchange oversea, and it also can be traded outside of Stock Exchange. After the economic crisis in 2008, preference share became the most important way for American companies to raise fund and the government to save the dieing corporations. However, in China's security market, the stock companies are only allowed to issue one type of stock---common stock. Preference share is necessary, since it's good for the health and stability of China's stock market. It will give more choices for the investors and help to relax the financial problem of the company which wants to raise capitals. It will also improve the corporate governance.This paper started from the fundamental concept of preference shares, combined with preference share's characteristics, adopted literature research method, example analysis research method, comparative research method, etc. to analyze foreign preference share systems, present China's current preference share system, compare it with some successful preference share system of western countries and give some positive suggestions as how to improve China's current system by learning from them.The first part is the introduction, research and analysis of the civil law system countries---French, Germany and Japan in respect of preference share legal system. The second part is the introduction, research and analysis of the common law system countries--- United States, United Kingdom and India in respect of preference share legal system. The preference share legal system of United States has been focused in this part, since the United States' preference share legal system is the most advanced system in the World nowadays. And in the final part of this paper, having compared and researched different countries' preference share legal system, some suggestions on how to amend the China Company Law to adopt the preference share system would also be given.