Cross-shareholdings Legal Research

Cross share-holding,a two-folded sword, is a complicated economical phenomenon. On the one hand, it is positive in that it can lower deal cost, enhance joint enterprise, develop scale economy, and resist ill-intensioned acquisition; and on the other, it is negative in that it is likely to bring about frothy company capital, to distort corporate governance, to hinder normal order in the stock market, to restrain competition and to inflict monopoly. So the negative effect of cross share-holding will be detrimental to the development of economy if it is not effectively guided and regulated. Most of the major developed countries impose legal regulation on cross share-holding in their corporate law, securities law, anti-monopoly law and other relevant laws to minimize as far as possible the negative effects of cross share-holding on the economical development and legal system.With the deepening of reform and the development of economy, cross share-holding has emerged and become growingly widespread in China. But the legal regulation on cross share-holding in China is almost blank, so it is necessary to discuss about the legal problems brought about by cross share-holding so as to promote what is beneficial and abolish what is harmful and maximize its positive role in the economical development. This paper approaches the problem from the origin of cross share-holding and its role in the development of economy and society, and then, with a comparative study of the legal regulations on cross-holding in foreign countries and their experience and lessons about cross-holding and on the basis of an analysis of the current situation of cross-holding in China, studies and tries to put forward some suggestions as to the legal regulation on cross share-holding in China.This paper is composed of four parts:Chapterâ… Review of Cross Share-holding. This chapter makes an analysis of the concept, nature, type of cross share-holding and probes into the origin and essence of cross share-holding.Chapterâ…¡The Role of Cross Share-holding. This chapter analyzes respectively the positive effects (to prevent management risk, resist ill-intensioned acquisition, induce harmonious effect, enhance joint enterprise, develop scale economy, promote value increase of company asset, increase capital accumulation, and make the raising and wielding of company capital more flexible ) and negative effects (frothy company capital, management of the company being out of control of the manager, distortion of corporate governance, hindrance of financial market order, confinement of reasonable flow of capital, and tendency to be monopoly) of cross share-holding.Chapterâ…¢Comparison of the Laws and Cases on Cross Share-holding in Different Countries. This chapter analyzes respectively the countries which loosen regulation on cross share-holding and the countries which impose strict restrictions on cross share-holding in order to offer an reference for the next chapter where legal regulation of cross share-holding in China is discussed.Chapterâ…£Consideration of Establishment and Improvement of Laws on Cross Share-holding in China. This chapter tries to put forward some suggestions as to the legal regulation on cross share-holding in China.