Research On Legal Regulation Of Cross-shareholding Among Companies

Originated from the USA, cross-shareholding is the product of the highlydevelopment of modern company systems. With the continuous introduction ofadvanced Western company management systems after the reform and opening,cross-shareholding initiates in China, and gradually becomes a common phenomenon incompany operating. As a way of capital participation and enterprise combination, it’squite important in the development of modern company. Meanwhile, it has a strongadvantage in consolidating and strengthening the joint between companies anddeveloping scale economy, thus providing an effective approach for the rapid expansionof enterprises. However, cross-shareholding may endanger the capital of company,violate the real capital, affect the healthy development of the securities market, andhinder the trade order. If left unsupervised, it will inevitably cause immeasurabledamage to economic development. Consequently, based on their national circumstances,various countries have regulated cross-shareholding in Company Law, Securities Lawand other relevant laws, hoping to reduce the adverse effects. But in China, thelegislative work has seriously lagged behind the development of cross-shareholding inreality. Company Law of China has no direct rule in cross-shareholding, resulting in thefact that legal regulation of cross-shareholding among companies is totally blank inCompany Law, let alone systematic consideration and operation. So it’s difficult toregulate cross-shareholding behavior effectively, forming a big loophole in thelegislation of Company Law in China. Evidently, it’s imminent to strengthen theresearch and legislation in cross-shareholding among companies.In view of this, the paper drew on the advanced experience of foreign legislation,and discussed how to further establish and improve the system. On the basis of clearlydefinition of meaning and classification of cross-shareholding, this paper intensivelystudied the necessity of legal regulation on this and extraterritorial relevant advancedlegislative experience from the perspective of theoretical analysis, and provided severalsuggestions on the legislation of cross-shareholding in China. First, take the legislativemodel of differential treatment, distinguish cross-shareholding between non-parentcompanies and parent companies, and strictly limit the proportion of cross-shareholdingbetween parent companies. Second, establish information disclosure system oncross-shareholding. Third, improve series of supporting systems on the legal regulation of cross-shareholding. The purpose of this paper is not only to briefly introducecross-shareholding by theoretical analysis, but also to promote the development ofCompany Law in China and improve specific legislation and supporting systems onlegal regulation of cross-shareholding by study the status of extraterritorial and internallegislation, hoping to provide some inspiration on the regulation and management ofcross-shareholding in China and make a little contribution to our socialist legal system.