The Predicament Of The Circumstance Restriction In Share Repurchase And The Solution In China

The share repurchase is defined with the company purchase the shares held by shareholders.At present,Chinese scholars all think that it is necessary to make some restrictions on share repurchase.The specific reasons include the requirement of the principle of capital,the prevention of infringement on the interests of minority shareholders,the avoidance of company management confusion,and the prevention of stock market manipulation by listed companies,circumstance restriction is one of them,which keeps the share repurchase in the certain range.With analysis,it is found that the financial regulation reflects the interests of creditors and public interests more,and competitive with the circumstance restriction;while the subject restriction and procedural restriction reflect the interests of minority shareholders more,which can harmoniously cooperate with the circumstance restriction.But problems have been caused by the clause.I makes statistics on the cases of China Judgements Online,and finds that the main types of share repurchase in the jurisdiction are those that exceed the circumstance of the legal circumstance which for share repurchase are very few in the cases.Even though the amending,the new issues cannot meet the circumstances.It caused the judgements awkward:if all the contracts exceed the circumstances of the legal circumstance are declared invalid,it would lose the justice.But if judges make these contracts valid in practice,Limited by this kind of legislation,in practice,it is difficult to confirm it.The scholars also focus on the problems.They usually think that these two norms is mainly that unlimited sacrifice of the interests of the company and shareholders to protect the interests of creditors,and greatly restricts the scope of freedom of the company to seriously affect the normal management of the company.To solve the problems,some scholars think it is necessary to repeal the circumstances restriction.and convert it to the resource regulation.Others think it can be remained and change the circumstance restrictions with legal interpretation.The difference between the two ways is the repeal of the circumstance restriction In comparative law.there are two kinds of legislation for the restriction of share repurchase.One is adopt by Germany and Japan,which always are regarded the representative of circumstance restriction,has absorbed the experience of American law to some extent,greatly deregulate the circumstances of share repurchase restrictions,and admit the shareholders meeting to determine whether to repurchase.the other is "general permission,individual prohibition" which are adopted in the United States.In fact,there are three kinds of legislation in the United States.One is the "surplus" legislation model which Delaware adopt,one is the "solvency"legislation model which Florida adopt,and the other is the circumstance restriction model which Ohio adopt.From the overall survey,we can find that it is difficult to judge that the circumstance restriction is obviously inferior to the financial regulation.From the perspective of transplanting American law,Contrary to the United States,Chinese judiciary doesn't have any judicial experience which can cooperate with the financial regulation.And the scholars also haven't study it.The shortcoming of the financial regulation is also ignored.Considering the current legislation situation in our country,it seems that it is more reasonable to refer the financial regulation in the basis of circumstance restriction with some standard.Even though the legislation has just been amended and there is no possibility of amendment in the near future,it can still be applied by judicial application.To solve the problem of increase the circumstances,it is necessary to observe the judicial experience existed.Judicially,there are four ways to solve this problem:to judge that the limited liability company is not included to the limitation of circumstance;to broaden the circumstance for repurchase through the identification of the normative nature;to broaden the circumstance for repurchase through disregarding the corporate personality;and to do it with the articles.But there are the problems.The conclusion that restriction of share repurchase doesn't exist among the limited liability companies is based on the language interpretation:the nature of norm is violating the legal purpose;And there is a misunderstanding in judicial judgments demonstrated by the disregarding the corporate personality.Of course,there are also useful experience such as the value judgement out of justice;to confirm the judgement with the purpose of norm;and to broaden the circumstance for repurchase through the articles.The problems of judgement above are caused by the ignorance of legal methodology,and the violate the regulation of interpretation.From the perspective of legal methodology,in the process of broadening the circumstance of share repurchase,we first need to make a substantive judgment on the assets of the company involved,and make a judgment based on the transaction price of share repurchase and the liability status of the company's assets.Only on the premise of not harming the interests of creditors,which is with the legal evaluation,it can be expanded through legal methodology.Secondly,different methodologies should be applied for different circumstances.Through the explanation of Articles 142 and 74,other legal documents and articles should be included in the scope of flexibility;the "reward the company's shares to employees" is interpreted as including the repurchase of the retired shares;the "capital reduction" is interpreted as including the situation that shareholders request to repurchase stocks,and after that,the company makes capital reduction decisions to repurchase;thirdly,the valuation adjustment dispute is analogized to"capital reduction".Finally,with purposeful expansion,Legalizing the share repurchase of loans.