Research On Preferred Stock Trading Mechanism

In 2013,the State Council carried out the implementation of preferred stock in China,which has brought a new way for enterprise financing and investment.Preferred stock is necessary,since it not only helps the companies have more financing channels,but also offers a new investment channel for some investors.The issuance of preferred stock brought a lot of profits for companies and shareholders,but also exposed the disadvantages of this system at the same time.However,The current understanding of the preferred stock is still staying on the theoretical level,the study on transaction mechanism of the preferred stock is still a blind spot,so that how to exit the investment after it releases for shareholders is not clear which can greatly affect the protection of the rights and interests of the preferred shareholders.This paper is targeted at transaction mechanism of preferred stock;discuss perfecting legislation to preferred stock from the perspective of protecting rights and benefits of preferred shareholders.The paper includes four sections as follows:In section one,the author describes the relationship between transaction mechanism of preferred stock and preferred shareholders' rights.By basic theory approach,the thesis analyses the two special ways of transaction mechanism of preferred stock-the redemption of preferred stock and the conversion of preferred stock.The legal basis for the transaction mechanism of preferred stock further explains the how important transaction mechanism is to the protection of preferred shareholders' rights.In section two,through studying those Chinese commercial banks release plans of preferred stock,the paper introduces the reasons for banks to issue preferred stock,appraises the clauses in those banks' release plans by empirical method and comparative study and gives ideas and suggestions.In section three,the paper elaborates on the obstacles for transaction mechanism of preferred stock in practice from legislative and supporting system levels.Through drawing on the experience of foreign developed countries' regulations of preferred stock,the legislative and institutional defects of China's preferred stock can be revealed.Finally,the author puts forward ideas and suggestions for perfecting transaction mechanism of preferred stock based on the above analysis.Whether using law or the article of company to regulate when facing certain issues,it is not only concerned with legislative skills,but also a practical problem.