Research On Legal Issues Of Share Repurchase Of Listed Companies

A listed company’s share repurchase is a company that is listed on the public offering of shares as the main body of the repurchase.In accordance with regulations,it uses cash or other property as the consideration to directly or indirectly repurchase part of the company’s issued shares from shareholders of specific or non-specific companies.The repurchased shares shall be cancelled or used as treasury shares.The share repurchase system is of great value in optimizing the company’s capital structure and avoiding illegal acquisitions;however,the system is still in its immature stage in China.Improper reductions have provided some listed companies with the convenience of market manipulation and insider trading,which has provided companies with Shareholders and creditors pose a potential danger.On October 26,2018,the Sixth Meeting of the Standing Committee of the 13 th National People’s Congress approved the amendment to Article 142 of the Company Law,which has a great impact on the company’s share repurchase system.The full text is divided into four parts:The first part is based on the amended Article 142 of the "Company Law" and provides strong legal support for companies to promote the establishment of long-term incentive mechanisms and improve the quality of listed companies,especially for the purpose of stabilizing capital expectations.The revised content of Article 142 of the "Company Law" was comprehensively introduced,and the amendment of Article 142 was analyzed and discussed from the perspective of legislative logic along the line of "legislative goals-value orientation-mode selection".The second part starts from the main content and purpose of the amendment,based on the legal text and legislative interpretation,analyzes the three aspects of the legislator’s fact judgment,value orientation,and legislative technology revealed from it,based on Article142,paragraph 1,of the Company Law The added items(5),(6)and modified item(3)of the listed company’s repurchase of shares have been explained in detail,and the effectiveness of the listed company’s repurchase of shares by going beyond and circumventing statutory matters It has been determined that it is not possible to generalize the effect of the repurchase of shares by a listed company beyond statutory matters,and it should be reasonably dealt with based on legal principles in the existing company law system.The third part discusses the procedural regulations for listed companies’ repurchase of shares,analyzes the procedural arrangements for listed companies’ repurchased shares in detail,and identifies the effectiveness of listed companies’ violations of procedural arrangements for repurchased shares.Listed companies’ illegal repurchase behaviors arenot always defined as invalid.Judicial practice should focus on the effectiveness of board resolutions to prevent illegal repurchase and protect shareholders’ interests through the establishment of directors’ legal liability system.The fourth part analyzes the re-issue process of treasury stocks after the share repurchase of the listed company and the financial accounting.The newly revised Article142 of the "Company Law" loosens the treasury stock system.In order to prevent illegal repurchases and disrupt the capital market,a supporting credit system should be established.In addition to preventing market manipulation risks,disposal of treasury stocks must also be strictly disclosed Information on upcoming events and existing events;the company’s procedures for implementing the treasury stock system must also be standardized,and the role of the general meeting of shareholders in controlling the treasury stock system must be standardized.The fifth part analyzes the historical evolution of the share repurchase system in China,and focuses on the conflict between the repurchase of listed companies’ shares and the protection of creditors’ interests,focusing on the effectiveness of the creditors’ repurchase contracts.In terms of restrictions,we should study to protect the legitimate rights and interests of creditors.When a share repurchase contract violates the provisions of Article 142 of the Company Law,its effectiveness is not of course invalid.We should also specifically determine the effectiveness of the repurchase contract in accordance with the relevant provisions of the Contract Law.And through the improvement of the creditor property preservation system to further protect the rights and interests of creditors in the share repurchase.