Research On Legal Issues Of The System Of Classified Shares In China

The system of classified shares is such a system that endows different shareswith different rights and obligations to realize the diversity of the structure ofshareholding. Since it can build rational company structure of shareholding, meetdifferent investors’ investment preferences and promote the steady development ofthe capital market, the system has been brought into many countries’ and regions’company law, especially the United States has set up advanced system of classifiedshares. The paper explores the practical and research value of the system of classifiedshares thoroughly, then analyses the current situation of the system of classifiedshares in our company law and summarizes the defects and limitationscomprehensively. Finally, the paper gives some legislative proposals to perfect thesystem of classified shares in our country, according to the rule about classified sharesin Common Law and Civil Law.This paper includes preface, text and epilogue, the text is divided into three parts.The first part is the basic theory of the system of classified shares. It firstlyintroduces the relative concepts of this system, such as classified shares, classifiedholders and classified shareholders’ meeting, using the two definition of “interesttheory” and “right theory”. The system of classified shares has a long story in thehistory. It can deepen the principle of “the same share owns the same right” and“equality”, correct the principle of “one share only own one right” and “capitalmajority rule” and reflect the freedom of company regulations. Then this partdiscusses the value and significance of the system of classified shares. It can not onlysatisfy different investment preference, protect the special shareholders, the companycan also control the company to realize the reasonable separation between theeconomic interests and shareholders’ interests, defense hostile acquisitions andachieve perfect governance.The second part, based on the current situation of the system of classified sharesin our country, analyses its defects. Kinds of common shares and preferred shares, Ashares and H shares, the public shares all belong to our classified classes. Because thelegislation on the classification of the class of shares is not clear, its validity has beenquestioned and most of the classified shares in practice finally have an “abortion”. At the same time, the existing relevant rules are lack of flexibility to operate, and finallyclassified shares could be converted into common shares.The third part,which is the writing focus and innovation point，comes up withsome legislation suggestions on the structure of the system of classified shares in ourcountry, based on the analysis of the earlier part of the institutional defects. Firstly, itintroduces the rules about classified shares in Common Law and Civil Law toestablish the legislative model of classified shares. Those legislative suggestions is toestablish a set of systematic and as far as matured system structure, including thepublisher, content and proportion of the classified shares, the institutions of classifiedshareholders’ meeting, relief system and responsibility system and so on. Finally, it isa little analysis on this system’s limitations and the interact effect of other supportingmechanism.