The Protection On Rights Of Shareholders Under The System Construction For Class Of Shares

With foreign capital investment, in the current financial market, private equity investment funds and venture capital funds have been increasing total volumes. They reveal that the Chinese economic market has tremendous demands for large volumes of circulating funds. In order to adapt to the increasing demands of market economy financing, and expanding channels of small and medium enterprises financing, the GEM system was set up in China in 2009. In 2012, approved by the Sate Council, the pilot project of NEEQ was also implemented. It also included small and medium enterprises in enterprise financing platforms. Enterprises of different scales have been pressing needs of financing from stock market. In contrast, financial markets in Germany and the UK have a long history of development and comprehensive system. They also have various ways of innovation and institutional guarantees for direct financing and indirect financing. As for the equity investment of direct financing, learning from the method of preferentially arranged “ special” shares in investment income rights of dividend distribution conducted by nations like Germany and the UK, may satisfy the profits preference of investors, so as to help more enterprises obtain more financing capitals.Economic demands will certainly promote systematic changes and updates in superstructure. In order to adapt to requirements of market economy development, enhance the efficiency in financial market, and provide better financing channels for enterprises in the Chinese market, experimental work of preferred stocks with improved systems was implemented in 2013. In the end of 2013, the State Council issued Guidance on the Implementation of Pilot Projects of Preferred Stocks(Hereinafter referred to as Guidance). It is the legal document of the highest efficacy level among the various legal norms issued in the end of 1990 s. Afterwards, Management Methods of Preferred Stocks Pilot was issued by the State Council.Prior to the experimental work of preferred shares, China had carried out several relevant practices on the field of preferred shares. However, the problems could always been found. Even after the start of experimental work of preferred shares in China, it’s still in the very early stage of the whole construction of preferred shares in China. To the construction of class of shares, the following article will stand in the perspective of why, what and how to analyze the construction of class of shares. Combining with the relevant regulations of the preferred shares, this article will discuss the existing problems and experience in the current preferred shares regulations and actual practice.According to the three above-mentioned perspectives the article will has five chapters:The first chapter is “demand of system construction of class of shares and its legislative practice in China. It starts the discussion with the perspective of “Why”, discuss the demand of system construction of class of shares, which includes the real economic needs, the demand for legal construction and the demand for different classes of class of shares. This chapter also analyzes the value of system construction through the view of corporate law, enterprises and shareholder.The second chapter talks about the contents of class of shares and its conflict of interest, from the perspective of what are class of shares. It analyzes the content, rights and impact on shareholders and creditors(mainly focus on the arising problems). Combining with the discussion about system construction of class of shares that stated in first chapter, in this part the author will also discuss the reasons for doing that and the existing problems under the currently legal system in China. It will also integrate theory with practice and actual defect, discussing the problems that urgent to be solved among the scope of construction for class of shares in China.The third chapter is the key chapter in the whole article, and will also be the innovation part. In the chapter, the relevant regulations and practice that prior to the experimental work of preferred shares will be analyzed and the deficiencies and defects will be stated. At the same time, the author also pays attention to the regulations and practice after the start of experiential work of preferred shares, clarify the regulations of the preferred shares issued to protect the rights of creditors and shareholders, which is innovation of China’s legislative practice on system construction, it will play an important role in guiding the future system construction, exploring whether other aspects of shareholders and creditors protections has defects, to find and solve the problems.The fourth chapter and the last chapter, based on the above-mentioned problems, providing the perspective of “How”, namely how to solve the existing problems, how to build a successful construction of preferred shares and how to protect the legitimate interests of shareholders. Combining with the discussion of our current legislation and practice from above chapters, starting from the method of comparative law, seeking paths and solutions for construction of class of shares in China. In this chapter, the author uses the method of comparative law to study the protection of shareholders and creditors, providing a reference to the legislative and institutional construction in China. In order to try to improve the experimental work of preferred shares in China, to improve the conducting of system construction, the last chapter takes the China’s national conditions and Western experiences into consideration, providing advices of legislative and institutional construction and author’s own considerations and suggestions.