| To Implement the system of preference shares means great changes and breakthroughs of financing channels in China’s capital market. The key of the preference shares system is that such shareholders have priority over ordinary shareholders on the rights of the allocation of corporate profits and residual property. However, compared with ordinary shareholders, preference shareholders’position is obviously disadvantageous, because the rights of the preference shareholders participating in corporate’s decision-making management and other relevant rights are restricted. The conflict of interests between them makes protecting the rights of preferred shareholders necessary. One important way to protect the rights of preferred shareholders is through the articles of association. The articles of association can provide rules over several items, such as dividends related to the cumulative preference shareholders rights, voting matters, mandatory dividend, the determination of dividend rate, the ratio of specific issues and conditions of participation in surplus property distribution. For example, when they set concrete rules over such matters, they can offer some fundamental principles to follow. Such principles may include that the company’s decision-making should be based on sound business judgment, the appropriateness of the transaction should be judged by the principle of fairness, and the principle of good faith. Besides such fundamental principles, following some legal rules themselves should also be noticed. The formulatation of articles of the preferred shares rights cannot break the mandatory provisions of the law. Moreover, it should also fully respect and reflect the autonomy of the preference shareholders in designing the articles of association.In addition to the introduction and conclusion, the structure and the contents of the thesis are as follows:Chapter one introduces the basic knowledge of preference shareholders’rights. Firstly, it clarifies the concept and classification of preference shares; and also the preference shares’ main features, compared with ordinary shares. Secondly, it describes the basic content of shareholders’ rights, including the rights of shareholders pointed and self-interest of usufruct rights. Finally, it discusses the basic idea of preferred shareholders’ rights after the introduction of the preferred shares and shareholders’ rights.Chapter two discusses that the articles of corporation is an important way of preference shareholders’ rights. Firstly, it analyses the role of the Articles of Association, which is to protect the rights of preferred shareholders. Secondly, it elaborates the basic principles of the articles of association for the protection of the rights of preferred shareholders. Finally, it examines the contents of the articles of association for the protection of the preference shareholders’rights.Chapter three identifies the insufficient protection that the articles of association provide towards the preferred shareholders’rights; thus offers some recommendations accordingly. |
