Discussion On The Perfection Of Category Shares System In China

The foreign study on Category Shares System is relatively complete. The system of category shares is first appeared in the USA. It is followed by other developed countries such as the UK, Japan, Germany and France. After being released in 1950, the Standard Law of Company has been revised every several years in the United States. In the revision of 2005, the setting of shares highlights. The companies are allowed to set Species Shares freely under the current Company Law in the United States. The board of directors can set and release a series of Species Shares if the articles of association of the company are authorized without the consent of the shareholders’ committee. When the market changes and company develops, the board of directors can also change the relative terms of Species Shares under specified situations. The Category Shares System in our country is not wildly accepted. The term of Category Shares is first noticed in the Regulatory Opinions on Limited Liability Company released in 1992. This is a relatively early system about Category Shares which is released by the National Development and Reform Commission.Category Shares is defined by the rights, its traits and by the rights that the shareholders own. In terms of the classified shares, different countries hold different classifications. And in our country we differentiate it based on the natures of investors and whether the circulation is limited or not. The law circle in China hold different opinions on whether the floating stock and the non-tradable stock should be existed.While in my opinion, we should analyze the classification of Category Shares under the current market and economic condition in China. Because of the different interests of different shareholders, it is hard to protect the interest of the shareholders who takes the floating stock. It can protect the shareholders who hold the floating stock. It is significant to divide under the standard of restriction on circulating.As for the value of Category Shares, Ren Erxin lists various regulations and legislative practice of Category Share System in foreign countries and analyzes its significance from the perspective of value. It can fully realize corporate financing and it is good for judicial autonomy as well as the equality of stock rights, etc. Ge Wenjunpoints out that the setting of Category Shares can protect the interests of small shareholders and ensure that the initial shareholders can control the company effectively.Meanwhile, it can also meet different needs of different shareholders as well as realize the rational distribution of resources.Basing on authorization, the legislation of the Category Shares System in the United States designs its system freely. It entitles the company huge spaces. On the setting of rights, it also keeps up with times and makes more updated category shares useful in capital markets. The development of Category Shareholding system of the UK and Japan are based on the experience of the United States. The British Corporate Law’s setting on category shares also gives the companies more choices.The embryo of Category Shares in our country appeared in the classification of ordinary shares and preferred shares. Before 1990 s, there is no complete rule on this area and the voting mechanism of Category Shares. Lots of problems occurred in the reform of stock rights such as follows: the ambiguity of the legislation to Category Shares System in China, the imperfect of the voting mechanism of Category Shares and the unprotected state of category shareholders, especially the small and medium category shareholders. In view of the above problems of Category Shares System in our country, we should establish the Category Shares System from the following three aspects: Firstly, we should define Category Shares System legislatively under the experience of the United States and Germany. We should strengthen the authorization and empower the companies to divide the shares freely. Secondly, try to perfect the voting mechanism of category shareholders. Finally, we should give category shareholders the right to withdraw shares and enlarge the range of small and medium when they prefer to withdraw shares.Recently, with the development of the international market, the connection between countries has been strengthened. The securities market in China is changing rapidly and so is the stock market. Our government starts paying more attention on the corporate governance and the study on Category Shares System is increasing. In spite of this, the current study on Category Shares System in China is still on the surface and we do not even have any specific law to explain this kind of system in detail. Moreover,most of our study is based on the experience of foreign systems. Therefore, it is very necessary to take in-depth study on Category Shares System under the current condition of our country.