The Study On The Preferred Stock And Common Stock

This paper focuses on the class of shares in the financial market and its shareholders to conduct an objective analysis of the impact and learn from foreign experience combined with Chinese present situation of risk prevention and control of certain key policy proposals.The first part of the study show that the substance is in the class of share options based on the contents of the cutting of debt equity, stocks and bonds can be called hybrid capital securities. Compared with creditors, class shareholders liable for the company business risks and the risk of bankruptcy; compared with the ordinary shareholders, class of share equity rights will be impaired in some way or expansion. In the era of tradable shares outstanding, non-tradable shares (ie state-owned shares, public shares) does not belong to the class of shares referred to herein.The second part of the study showed that class of shares for the construction of the legal system to build a multi-level capital market is important:1. Flexible Venture investment and financing arrangements and corporate governance structure;2. Stable A-share market to ease the contradiction between dividends;3. Resolution of commercial banks crisis, financial difficulties;4. revitalize the stock, to provide a more efficient pension investment channels;5. promote overcapacity industry mergers and acquisitions.The third part analyzes the system to build the theoretical foundation class of share. On the one hand, the system does not violate class of shares with the same rights and the principle of equality of shareholders of the Companies Act that the basic theory-different classes of shares have different rights; the other hand, the system generates class of shares is based on the theory of company law from shareholders "homogenization " logic assumes that the information generated by co aptitudes and interests of humanity based on shareholders’heterogeneous’ assumption changes. The fourth part of the system to be introduced for foreign. American legal characterized class of shares, is committed to maximum flexibility, encourage free set; Britain and the U.S. concept of similarity; Germany pay more attention to class shareholder rights protection and realization.The fifth part discusses the class of share system problems and risks. For preference shareholders, preferred ratio is too high, common shareholders may engage in high-risk investments; small liquidity preference, preference shareholders appreciation gains limited. For distribution companies, preferred issuance costs are too high; easily affect the company’s reputation and undermine endogenous financing scale. For ordinary shareholders, preferred fixed income is too high, common stock will be affected.The sixth part analyzes established class of shares of the legal status of the system and the environment, and propose institutional building ideas. On the one hand, because China is now no class of share system, the majority of our company agreements, statutes arrange alternative class of share system, but there is uncertainty, hidden high, transaction costs are high, it is difficult to meet the special requirements and other issues; hand, on the class of shares of the legal system, although there is a blank, but the " Company Law","Securities Law " and other terms have to reveal all the other forms of the space reserved for the system, therefore, does not exist in our set of institutional class of shares obstacles.For this class of shares in our legal system to build the following recommendations:the elimination of class of shares in the legal system of the blank, modify the "Company Law ","Securities Law", recognizing the legal status of class of shares; protection of autonomy to the provisions of the Articles of Association; create a class system to limit the proportion of shares issued; establish preference voting resurrection system.