Research On Protection Of Preferred Shareholder Rithgts

As the Administrative Measures for the Pilot Preferred Shares Programme has been issued by the State Council and many enterprises have announced their preferred share issuance plan, preferred shares, as a legal concept and corporate finance instrument, have gained popularity. The preferred share system is thus established. The system helps enterprises to optimalise capital structures, and its accumulated dividends are beneficial to offset the instability in the revenue collection of the start-up and growing enterprises thereby improving their overall performance, as well as efficiency in capital financing and utility. As a newly introduced legal concept and important financing tool for private equity, preferred shares reflect the trend and development of multi-layer capital market, which keenly deserves the attention of law scholars.This article firstly introduces the development of private equity in China and the current preferred shareholder mechanism, and analyzes the differences in legislation, law and jurisdiction levels so as to see the weaknesses in China's legal system. In observance of all those obvious differences, this article resorts to the LLSV doctrine in analyzing the differences between China and the United States, and takes the view that China shall learn from the United States with the awareness of the differences in legal origin, judicial environment and private equity development. This article aims to observe the highlights of the preferred stock system in America in an objective perspective to enlighten the thoughts in developing that in China, thus further promoting the development of private equity.