Share Repurchase Legal Research

Share repurchase, also entitled"redemption and repurchase of shares",means incorporated company repurchases its shares which has issued in outermarket. Share repurchase is that system stipulated commonly by all the countriesin the world company law. At present, it is an important finance implement in westmature capital market In practice, share repurchase has also its abuse, initiating afew negative effects easily. For example, conflicting with traditional companylaw; violating the principle of the capital of maintaining, having adverse effects forthe benefits of creditors; violating the equal principle of shareholder and initiatinginsider dealing easily. But on the other hand share repurchase also has its importantfunction, for example, having important significance in the aspects of optimizingthe capital structure, protecting the rights of minority shareholders, defendingmalicious repurchase and pushing forward modem incentive mechanism. Everycountry's legislation about share repurchase mainly has two kinds ofmodes: "principle for forbidding, the exception for allowing" and "principle forallowing, the exception for restricting". From the regulation of share repurchase inlaw of "Company Law", "Securities Act", "Regulations and Guidelines of ListedCompanies", and other relevant laws, we can conclude our country adopts themore stringent mode of "principle for forbidding, the exception for allowing". Thismode has active effects to protect the shareholders and creditors'benefits anddefend the business order. However, we should also be aware of our stockrepurchase which still has many deficiencies in the system. Basing on the analysisof the function and disadvantages of share repurchase and comparing thelegislation of major countries and regions, the thesis points out the inadequacies ofthe existing stock repurchase and discusses our legislative measures to be taken.The text is mainly divided into three parts, the main part ofwhich reads as follows:PartⅠ: stock repurchase and the system of stock repurchase. Firstly, from thebeginning this part points out the meaning and the three features of sharerepurchases; Secondly in order to grasp the concept of share repurchases moreaccurately, this part also lists the relevant concepts and analyzes them. Thirdly,this part also inspects the legal requirements of the common law countries represented by the U.S.A and Germany, France on behalf of the civil law countriesand reveals the shortcomings and their legislative reasons of both modes.PartⅡ: the function of stock repurchase. The correct understanding of thefunction of the stock repurchase decides the value of legislative orientation. Thispart introduces the positive and negative functions of share repurchase. Stockrepurchase is a double-edged sword, when the company repurchases its ownshares, playing their strengths, we should also prevent and eliminate the adverseeffects.PartⅢ: the legislative measures to be taken in our country. This part is thecore of the thesis, China has now adopted the mode of "principle for forbidding,the exception for allowing", however it regulates very narrow to the scope ofshare repurchase. It does not make the source of fund, the quantity, the procedure,the method and the information disclosure of stock repurchase clear. This part alsoanalyzes the legal effect of the illegal share repurchase and the treatment and theirlegal status in detail.