The Regulation Of Subject Stock Concerning Company Law

The corporate law is formulated on the purpose to inspire the public, byimplementing limited liability system, to make investment, driving them willing toinvest corporate with their spare money, thus to provide material guarantee formanagement activities after listing. There are more innovative finance methods undermodern corporate law. The system of subject stock is an effective method to improvefinancing, which has deeply influenced Chinese corporate systemThe statute law has its hysteretic effect. In China, regulation on subject stock cantrace its history back to Opinions on Regulations on Limited Corporation in1992, inwhich it was mentioned that common stock and preferred stock can be established.However, there were no more further regulations on subject stock in later revision ofCorporation Law. In the case of Shiheng Company in Gansu province bring theattention of legislators to develop the subject stock. In the changing market, itbecomes trade practice to sign VAM on the purpose of financing. The validity ofVAM is partly acknowledged in the ruling of the Supreme Court, while the change ofthe system in Corporate Law is more needed. The positive regulation in CorporateLaw can provide appropriate system of subject stock, which is unstable and applicablefor financing, rather than VAM. The subject stock has long history in U.K., U.S.A.,and Japan. It is a good time for Chinese market to change the way of financing. This thesis consists of three chapters.Chapter one via elaborating the valuable of subject stock to admit the rationalityand enthusiasm of which then lead to the conclusion that it needed to be regulated bylaw.Chapter two describe the current situation of subject stocks in China andsummarize the imperfection while give the advise that China need to promote thesubject stock.Chapter three explain how the company law regulate the subject stock in twoaspects.