Research On Classified Shares System

The concept of classified shares has been existing in corporate governance system and the stock market for a long time. Classified shares are a series of shares which are divided into different types to make a company’s stock structure more diversified. From the beginning of the system, it has made considerable progress in foreign countries. While in China, it has not been properly applied. About this, there is no specific provision in Chinese company law that provides the categories of shares, the only existing authorized provisions are insufficient to cover the blank of this system. But the concept of "classified shares" is not a new thing in our country. Many shares existing in China also belong to classified shares in a broad way, like ordinary shares and preference shares, A shares, B shares, H shares, tradable shares and non-tradable shares, etc. But not all of the above are meaningful classifies share in the real sense.Through discussion of the first case of valuation adjustment mechanism(VAM) in China and the case of Alibaba’s partnership, the paper analyzes the legal risks hiden behind it, and then proposes the idea of introducing classified shares. Then the paper defines the concepts related to the classified shares system, analyzes the legislation status and practices in China and the problems of it. By learning from foreign legislative practice, our country should establish and develop the system of classified shares in order to protect classified shareholders.In this paper, the text is divided into four parts. The first part begins with two cases about arrangement of shareholders’ rights to induce the system of classified shares, which can eliminate risks hidden behind these kinds of agreements. The second part focuses on the current development of classified shares and the problems. Firstly the paper briefly introduces the related concept of classified shares, and the relationship between classified share system and the principle of shareholder equality, and between classified share system and classified shareholder protection. Then it analyzes the current development of this system, including legislative status situation and its practice. Finally, the paper analyzes of the possible problem it may occur in the establishment of the system.The third part is a comparative analysis between the civil law countries(Germany, France, Japan, Korea), and the major common law countries(US, UK). It mainly analyzes the basis of the creation of classified shares and the types of classified shares and the meeting of classified shareholders in these countries(regions).Through a comparative analysis of the above countries(regions), the paper aims to provide a reference value to the development of classified shares in China.The fourth part is to build classifies share system in China from the viewpoint of protecting the classified shareholders’ interests. First is to determine the basis of the system. Second is to build and improve shareholder protection system by the combination of relief in advance and afterwards. The core of relief in advance is to establish classified voting system, and the relief afterwords is to provide right of action and appraising right to classified shareholders.