The Research On Shareholder’s Preemptive Right

The shareholder’s preemptive right is an important right. Its main function is toprevent the dilution of stock ownership and safeguard self-benefit right and co-benefitright. The subject in the shareholder’s preemptive right is a company’s originalshareholders and the object is the new shares issued by the company. When definingthe subject and the object in the shareholder’s preemptive right, the exceptional casesunder the general principle should be taken into account so as to balance the profitdemand of the company and the shareholders. The construction of any institution oflaw can be dated back to the legislators’ value judgment. What actually involved inthe shareholder’ s preemptive right is the contradiction and unity between thecompany’s financing demand and the shareholders’ profit protection; if the valueorientations for the two are different, their corresponding legislative modes are alsodifferent. Currently, the main legislative modes throughout the world include intrinsicweight mode, non-intrinsic weight mode and relative intrinsic weight mode. Given thespecific national conditions that the profit of our country’s minority shareholders’cannot be well protected, our country’s capital market has not been mature, andcompanies’ internal governance structure needs to be improved, it is appropriate forour country to adopt the relative intrinsic weight mode, i.e. to legislatively define theshareholder’s preemptive right, and without the strict legal proceedings and thesubstantive examinations, the application of the shareholder’s preemptive right cannotbe excluded. Although the shareholder’s preemptive right has been applied in ourcountry, the current legislation about the shareholder’s preemptive right in ourcountry is simple and lacks maneuverability. It is only involved in the Clause34andClause35of Company Law, the Clause17of Rules of the Supreme People’s Court onSome Issues Concerning the Application of Company Law of the People’s Republic ofChina (III), and the Clause12and Clause14of Administrative Measures for theIssuance of Securities by Listed Companies, but there is no concrete system design, sothey are difficult to solve the existing problems in reality. At present, the existingproblems mainly include the rights offering of the listed corporations, expropriationformed by rationed share, and the inappropriate legal exclusion and factual exclusionfor the shareholder’s preemptive right. To solve these problems, the shareholder’spreemptive right which cannot be excluded optionally should be legally defined, the institution of laws related to the rights offering of the listed companies should also beimproved, and the exclusion of t the shareholder’s preemptive right should berestricted as well, so that the shareholder’s preemptive right can be better protected.Where there is a right, there is a remedy. the shareholders should be provided withvarious ways of relief, so as to ensure that when the shareholders’ right is invaded,they are able to effectively protect their profits.