Research On Preference System Of Stock Company

As an equity mode, preferred stock system is widely used and developed maturely abroad. But the regulation for preferred stock is still a blank in The Corporations Law in China. With the further development of financial system reform in our country, the state council issued “The guidance of the pilot implementation’s preferred stock” in 2013. Then the Securities and Futures Commission issued “The Preferred stock pilot management measures” on March 21, 2014. These two systems filled the blank of preferred stock and provide a legal basis for the establishment of preferred stock.This paper is mainly talking around the preferred stock of joint- stock company. It made an introduction to the origin, the concept and the function with the reference of foreign legislative practice. By the comparison with ordinary shares, it declared the characteristics of the preferred stock more clearly. Although preferred stock has limitation on the right of management and has no right to vote, it’s prior to the ordinary shares on the distribution of profits and surplus property.Discussion on the of preferred stock system from the angle of law, it still belongs to the private law and there is no breakthrough “Equal shareholder-right” theory. First of all, as an equity mode preferred stock belong to the property rights of equal subjects. It emphasizes on the autonomy. On the definition of shareholder rights, the Securities and Futures Commission made mandatory provisions on preferred stock. But there are more autonomy between shareholders and the company and they both get more free space. Therefore, this paper made a detailed introduction on the type and definition of preferred stock. Secondly, “Equal shareholder-right” embodies the essence of equality, not formal equality. The preferred stock in our country has just established. In order to protect the interests of investors, The Securities and Futures Commission have made mandatory provisions to the issuance of preferred stock, trading and the conversion mechanisms.This paper analyzed the preferred stock system and explored the legal and the legislative purposes. Based on the legal perspective, it explored what kind of function it brings to the reform of the financial system. The establishment of preferred stock system meets the needs of the actual situation in our country. It has brought new vitality to the development of our national economy and it is a better solution to the financing needs. This system has broadened the financing channels and at the same time it has brought some benefit to some small and micro businesses in the start-up period. At last it also has injected new vitality for the healthy development of China’s financial market.