Legal Research On The Equity Category

The equity category is a very important element in the modern corporate legal system. At the same time, it is also a way to diversifying equity categories. The core of the equity category is the equity content of the autonomous configuration which determines the type of the equity category cannot be exhaustive. The author just can sum up and introduce some common types of the equity category on the basis of several national legislative practices. Although the equity category is not exhaustive, it has some characteristics, for example legal authorization, flexibility and openness. The equity category is not a series of exceptions to the basic principles of corporate law; on the contrary, it is the scientific understanding of the principles of the autonomy, the equity and the capital majority rule. Considering the equity category systems, many countries’have become mature due to the development during last century. Especially the United States, Britain, Germany and Japan, they are typical representatives of the national legislative practices. No matter on the theories, the definition, the structure of classification or the settings of procedure, they all have very sound provisions. The article seriously analyzed some legislative cases of the four mentioned countries, founding that they were innovative while they were learning from each other. After analyzing the common and special points, the author summarized advantages and disadvantages of each system and provided a very rich experience for China in setting up and developing equity category system.In addition to the preamble and the conclusion, the article is composed by three parts: The first part is an overview of the equity category, introducing the concept of the equity category, in depth analyzing its substance, differentiating it and some similar concepts through substantive analyses. This paragraph also summarized legal characteristics of the equity category and comprehended its connotation. In addition, the author also tried to configure the concept of the equity category by grouping some common categories. As for the queries of some scholars, this article demonstrated the legitimacy of the equity category, stating that it is not against basic principles of the company law.The second part is used to examine and evaluate the legislation of the extra-territorial equity category. Based on the studying of the legislations of the United Kingdom, the United States, Germany and Japan, the author made a general introduction of their legal provisions of the equity category, in particular, setting out innovative ones. Additionally, the article carefully analyzed the advantages and disadvantages of the legislations, laying a good reference foundation for China.The third part introduced the author’s thoughts of our country on achieving the equity category. Actually, the equity category of our law has not been clearly defined, even just is vague. However, from some of the provisions of the existing Companies Act and administrative laws and regulations, some empirical legal basis of the equity category can be found. Given the equity category is in favor of providing diversified ownership structure and improved quality of corporate finance, broadening the financing channels of the company, improving the corporate governance structure and enabling a company to respond flexibly to complex practical difficulties, the author strongly recommended that China should establish an integrated equity category system. This is a work in need of well defined provisions on the legislative level. It includes the choice of the legislative mode, the refinement of the relevant provisions of the Articles of Association, the determination of following the unifying the powers and the responsibility, the formulating of a null system and the planning of specific programs to protect shareholders. In this article, some suggestions have been proposed on the basis of above mentioned national legislative practices, in the hope of making a contribution to building our equity category system.