Share Buy-back System To Study

Share repurchase refers to a company buying back its own shares that were issued to the public before and writing off them or holding them as treasury stock. As early as at the end of 19th century, share repurchase system had been established in some developed countries. After entering the 70's or 80's of last century, share repurchase system achieved great development. Because of its intrinsic characteristics, this system was rapidly adopted by many countries' corporation law and was developed up to the present; it becomes a recomposition form for the alternation of ownership structure and controlling structure of company at last.At the same time because of the limitations of understanding in the traditional theory of corporation law and many abuses that occurred in the practice, many countries put extremely strict restrictions on share repurchase, even absolutely forbid it. The most direct reason is that if a company purchases the share of its own and become shareholder of itself, that will confuse the legal personality. It is thought that share repurchase will make the constant capital of a corporation can't sustain in practice and that will damage the rights and interests of creditors and middle or small shareholders and will at last weaken the credit base of corporate system.However, with the development of modern corporations it is inevitable to break through the traditional theories of corporate law and make some innovation in order to provide competitive instruments that are more efficient and quick for modern corporations. As an instrument for the financial innovation share repurchase system has a lot of functions and plays a very important role in the capital market. Its functions are: adjusting and improving the capital and financial structure of corporation; function of dividend; preventing the hostile tender offer; restraining the inordinate speculative dealings, preventing the stock market from sharp fluctuation. With regard tospecific situation of our country, share repurchase has strategic value for the reduction of state-owned shares.A principle for share repurchase as a whole has been established in the law of our country, it's "forbidding in principle and permitting for exceptional conditions". The prescriptions on share repurchase in our country are sketchy in content, simple in format, limited in scope for application. Share repurchase is permitted only in the condition of capital reduction and amalgamation of corporations and the shares that repurchased must be written off at once. Actually speaking these prescriptions were fit for the social economic conditions of a certain stage. But with the rapid change of economic conditions especially the further linking of our countries' economy with international economy, they become obviously not adaptive with the development of economy. Comparing with the share repurchase system of developed countries, there are still a lot of deficiencies in the system of our country. So it is imperative for our country to revise the current system of share repurchase. It is just based on this context that the author writes this thesis. In this thesis the author analyzes the share repurchase system as well as some relate issue and expounds the improvement of legislation on share repurchase in depth in four parts.Part I: Introduction of share repurchase. In this part the meaning of share repurchase is explored in detail. The author distinguishes it from other related concepts and introduces the three types of share repurchase. At the end of this part, the abuse and significance of share repurchase is discussed as focal point.Part II: The legislation on share repurchase system in our country and comment on it.Par III: The issues on the protection of the rights and interests of creditors and middle or small shareholders in share repurchase.Part IV: The improving of share repurchase system in our country through legislation.