Study On The Legal Problems Of Commercial Bank Preferred Shares

Preferred is an important financing tool in the capital market plays an irreplaceable role. Because of the voting preferred stock is usually limited, generally unable to participate in the company’s management decisions, and do not want to raise funds for much-needed control over the dilution of shareholder companies, issuing preferred stock is their choice. The main purpose of the general preference shares issued by the Company for financing, and then make an inventory of the entire company’s cash flow, but for commercial banks, meaning also the only non-case. Preferred stock can be used as a complementary tool to commercial banks capital level, you can replenish bank funds, while also improving the bank’s capital adequacy ratio by issuing preferred shares, which can better cope with capital regulation allowed to improve against risks capacity. However, the preferred stock must meet the "Basel III" on the relevant eligibility criteria level of capital instruments before they can be identified as tier one capital, included a capital adequacy ratio. Compared with the general preference shares, in line with the "Basel III" standard need to have a stronger preference for loss absorption capacity. This leads to a commercial preference shares with a number of special features, such as dividends and does not constitute a breach of contract to cancel, you must set can be converted into common shares of mandatory provisions and so on. These characteristics of preferred stock commercial bank investors had concerns, shareholders’ equity of preferred stock does not seem to protect or even impossible to achieve. How to protect the interests of preference shareholders to become commercial banks preferred shares can not be avoided. Creation and resurrection of the voting system in terms of class meeting is important to protect the interests of relying on preferred stock. By category of shareholders, preferred shareholders may own vital interests in matters relating to the exercise of the voting shares of the category in the bank for two consecutive years, or three years without cumulative distribution of profits, the preferred shareholders do not even have held a class meeting, and together with the Ordinary Shares general meeting of shareholders to participate directly exercise their voting rights. These systems give the preference shares at a certain protection, but also will undoubtedly affect the governance of commercial banks. Preferred abroad has a long history in our country are still considered new. November 30, 2013, the State Council issued "Guidance on preference shares carry a pilot," officially opened the curtain of the development of preferred stock. Subsequently, a series of laws and regulations promulgated more to stimulate the market for preferred shares enthusiasm. However, with the market enthusiasm is different, our "Company Law", "Securities Law", "Commercial Bank Law" and so does not have any provisions for preferred stock, preferred stock for the orderly development of commercial banks to meet the bank rigid demand supplementary capital level, China needs to gradually establish a complete legal system of preference shares.