Split Share Structure Reform Legal Issues

The separation of equity ownership and trading rights circular results from the clash between the internal request of the equality of funds and the inequality of different ownerships' funds in capital markets. The separation of equity ownership and trading rights circular refers that, because of the thought of the priority of state-owned shares' interests, joint stock limited companies in Chinese capital markets divide their shares into two categories intendedly based on whether or not shares are tradable in markets. The legal essence of the reform regarding on the separation of equity ownership and trading rights circular is the internal request of the right-obligation coordinateness and the equality of capital. This reform can correct the present illegitimate classification of shares on the level of law, and form and upgrade the shares and stocks' system of China. It is the demand of market competition that turning the non-tradable shares into the tradable shares. This reform is not only a issue of designing and choosing the right rules on the level of economy, but also a issue of the improvement of the rules in capital markets on the level of law. The reform regarding on the separation of equity ownership and trading rights circular will face the problems about the qualification of the subject of this reform, and about the legitimacy of the grounds of this reform, we should perfect the rules to ensure that executive power will operate constitutionally when the conscience of the supervising department conflicts with the demands of law. The tradable shares and the non-tradable shares are two kinds of shares with different rights and obligations, if they are equal in voting rights , it would against the principle of power equaling with responsibility, the shareholders of the non-tradable shares have to give the consideration to the holders of tradable shares if they want to gain the rights of the tradable shares. There is no basis of gaining the consideration between B shares and H shares. The reform regarding on the separation of equity ownership and trading rights circular will involve the interests of different holders, so we have to give much attention to the interests of H shares' holders and B shares' holders, at least we cannot...