Research On The Regulation Of Public Company Using Share Repurchases To Manipulate Market

Before2005，our country’s Public company repurchase shares in order to continue to reform the shareholder structure in state-owned enterprises. Because the share repurchase of Public company in this time is controlled by the orders from the government, it was not a strong link to the manipulating the market. But along with the deepening of the reform and development of the stock market mechanism, securities regulators and Public company have realized the importance of share repurchase to our stock market. Under the depression of stock market in2005, CSRC issued the “Share Repurchase of Listed Companies’ Management Approach"(Trial) in order to maintain the stock market stability. And the Chinese Corporation Law amended newly has the scope of allowing listed company repurchase shares. From this time on, share repurchase as an efficient tool of maintaining the stock, has been more and more realized by Public company. But because the operation of above two rules is not ideal, and the share repurchase of Public company can deservedly influence stock prices, many Public company with dubious motives use share repurchase to manipulate stock markets. To prevent this kind of behavior CSRC issued “Supplementary Provisions on Public Company Repurchase Shares Through the Method of Open and Centralized Price Bidding” in2008. This Supplementary Provisions further improved the rule of the share repurchase of Public company, But because our country’s academics and securities regulators have ambiguous feelings about the links between share repurchase of Public company and the manipulating the market, above rules cannot give full play to its role to prevent to listed company use repurchase shares to manipulate the market.Through this article which describes two characteristics of share repurchase of Public company and two motives of Public company repurchasing shares, the connect between share repurchase and manipulating the market can be clarified, and then analyze the necessity of legal regulation on Public company use share repurchase to manipulate the market based on this. I think China should refer to the advanced legislation experience and regulate Public company use repurchase shares to manipulate the market from four aspects by default by combining with our national situation. These four aspects include: determining the nature of the plan of share repurchase; perfecting the system of information disclosure; establishing rules of safe harbor; setting the rules of quarantine.