Repurchase Of Shares Of Listed Companies In China Research

Share Repurchase by Listed Companies is the act of listed companies to buy back its emitted shares, then cancel the repurchased shares or hold them as "treasury stock". Since 2005, China started the Reform of Non-tradable Shares, enacted the Administrative Measures on Tradable Public Stocks Repurchase by Listed Companies (Tentative), revised the Company Law, and came up with the affiliated regulations. These legislations have expanded the scope of application of share repurchase by listed companies, stipulated the conditions, exchange modes, price, capital resources, and quantity of share repurchase by listed companies, clarified the measures of prevention of insider trade and market manipulation, and also provided measures of protection for obligees and medium-sized and small shareholders. The Reform of Non-tradable Shares and the new legislations have provided listed companies with good legal platform and market environment, thus listed companies engaged in share repurchases actively. Presently, listed companies' share repurchases are of diversity: some listed companies take share repurchase as a way to collect shareholders' debts to the listed companies;some listed companies repurchase their tradable shares in aim of delivering positive signals to the stock market to raise their share's price;some listed companies repurchase their non-tradable shares before the Reform of Non-tradable Shares in order to strengthen the control of controlling shareholders. Listed companies' practices of share repurchase have breached the present legislations to some extend;however, such breaches have been approved by the supervisory authorities. This contradiction reveals the limitation of new legislations. With a view to the immaturity of Chinese stock market, the supervisory authorities should restrict the application of share repurchases in the aim of correcting the low stock price, maintaining controlling shareholders' control, and setting off shareholders' debts. World-widely, it is the general trend that the scope of application of share repurchase by listed companies will be expanded, and China should and will follow such trend.