The Protection Of Preferred Stockholders’ Equity

Preferred shares of international common types, with equal importance and status of common stock, which is issued by stock companies, and other property interests in the company’s distribution of the process of priority shares. Western countries with developed market economy system as long as the implementation of all of the preferred shares of the relevant provisions were generally recognized and adopted the preferred species. My current company law does not direct the provisions of preferred stock, nor deny its existence may be, and the type of power to the State Department to appear. As an important investment and financing tools, preferred for its fixed its revenue, low risk characteristics, do not want to risk attracting small investors and institutional investors. For companies, the issue of financing preference shares do not like bonds debt service, to a certain extent reduce the pressure on the company’s funds, but also enhance the company’s financing flexibility, broadening financing channels for the company. At present, China is in the initial stage of market economy, stock system is not perfect, in our company’s shareholding reform process, the preferred system has not been fully utilized. Although our current Company Law Article 132 for other types of stocks have a general statement, but other types have not made clear whether the preferred stock, and preferred stock in our practice and has not been a corresponding effect, but in gradual change in the company’s shares preferred shares canceled.Given the importance of preferred stock, and our lack of laws in this regard, the paper selected for the study preferred shares, preferred shares by the research, pointed out that the development of our preferred stock in our existing legal difficulties for establishing and improving Preferred shareholders to protect our legal concept. In this article, introduction and conclusion, is divided into four parts:The first part of the preferred shareholders an overview of the protection systemThis section first discusses the concept of preferred equity and features, while on the preferred shareholders the right to perform analysis, in the nature of the right of shareholders, based on the view that the nature of its shareholder rights does not reject the right of priority preference shareholders Instead, the difference for the shareholders provides a basis. Secondly, a comparative way to protect preferred shareholders to analyze the advantages and disadvantages that the preferred way of using not only meets the corporate financing needs, and increased corporate finance of Tanxing, Shihegezhong investor demand for investment also facilitates corporate Zai various financial conditions, financing. Why should we then analyzed the legal protection of preferred stock, preferred stock of the existing legal rights and interests of small shareholders to protect the powerful supplement. Preferred shareholders of the Company Law of the creditors unable to obtain legal protection and relief. Finally, there is preferred stock in our pilot analysis of the necessity of that,1. Pilot preference setting is conducive to change the current turmoil in equity, improving the stock types, and promote ownership structure of the scientific, flexible, mature.2. Try to better protect state-owned preferred equity, to prevent state-owned assets.3. Try to solve the foreign ownership issue preferred stock effective way.4. Pilot preferred anti-merger company mergers and effective means.5. Preferred securities market is conducive to stability, promote long-term investment philosophy.The second part of the preferred shareholders to protect the legal issues facingThe part from the preferred stock and related equity interests of the manifestations of conflict began, that this conflict should include rights of preference shareholders and ordinary shareholders of conflict that a conflict of interest in the distribution of profits and corporate capital restructuring in the conflict of interest; priority Shareholders equity internal conflict between the mainly non-cumulative preference shares and cumulative preference shares and participating preferred stock between the preferred and non-participation in the conflict between. The causes of the conflict then analyzed, common stock shareholders and preference shareholders, conflicts of interest is mainly due to the unique nature of the preference shares, distribution of profits and the liquidation process in the priority of repayment. This section includes, the Company issued a higher priority to the relationship between stock and preferred shareholders, through research, and reference to relevant foreign practice, in order to protect the rights of preference shareholders, in order to prevent the holders of preference shares in issue the right of priority for the company priority of this issue the same or even higher in real terms in preferred stock and diluted downgraded both the legal rights normally granted to preferred shareholders, the preferential subscription rights and to give priority to the interests of the voting rights related issues. In order to better protect against preference shares, preferred shareholders have a clear need to protect the right of priority which should be, then this article gives a summary of these rights,1. The distribution of benefits claim, which is the most preferred shareholders in need of protection important right. Most embodies the characteristics.2. The right to distribute the remaining assets be liquidated when the company is dissolved, if there is surplus property, such shareholder before ordinary shareholders the right to distribute the residual property.3. Right to vote, the motion of the shareholders meeting on the resolution of the shareholders the right. Shareholder voting rights as shareholders to participate in the management of a major company the right to exercise its economic interests with shareholders in close contact.4. The right of shareholders to repay the company or companies under the articles of association determine the duration and conditions of the stock certificates, the shareholders request the company the right to return monies.The third part of the law to protect preferred shareholders to resolve the difficultiesThis part of the solution preferred shareholders from the start of the conflict, that the resolution of these conflicts can be resolved by voting system design and adoption of conflict of Appraisal system for conflict resolution means to achieve. Preferred stock primarily in the hands of small investors willing to take risks, and therefore, preferred stock and the protection of small shareholders a close relationship between, preferred stock rights to protect minority shareholders as a positive measure of relief to see a fundamental large shareholders and minority shareholders to adjust the distribution of interests between, thus weakening shareholder harm the interests of minority shareholders motivation. Research on preference shares, the preference shareholders on the accumulated unpaid dividends related to the problem under priority in domestic and foreign scholars concern the author in the western developed countries like the United States, German studies and the requirement for foreign practice of reference-the cancellation of cumulative preference dividend behavior.Last part of the establishment and improvement of our preferred shareholders to protect the legal conceptEstablishing the legal protection of rights of preference shareholders, as our current legal system of preferred equity in the protection of the lack of effective regulations, the author believes that, in our "Company Law", by adding to the preference shareholders protection. Preferred shareholders can directly affected by China’s Company Law, it has a legal basis exists to make protection of rigidity. This section includes preferred equity preference shareholders to protect the legal rights of innovative ideas and system protection; preferred shareholders to protect the legal concept:1. To establish and perfect the preferred shareholders 2. Preferred stock under certain conditions should be maintained under the right to vote; preferred shareholders the right to legal remedies that have been violated fiduciary duties involved with the Business Judgement Rule and the priorities of objection Shareholder voting rights; Finally, the legal protection of shareholders preferred stock build.The main innovation of this article1.Preferred shareholders to protect the analysis of conflict, from the preference shareholders and ordinary shareholders and preference shareholders between the conflict between the preference shareholders of both internal and external conflict set, and changes in the back proposed and the corresponding solution.2. Preferred shareholders to protect the legal concept of innovation, namely the protection of shareholders from the preferred system for both ideas and concepts of law were tentative exploration of a balanced solution to the conflict taking into account the principle of efficiency.3. This concludes our preferred shareholders to protect the legal concept that the existing Company Law of China should make the appropriate provisions of preferred stock,1. Shall establish and improve the preference shareholders of the General Assembly 2. Should be retained under certain conditions, preferred stock the right to vote.