Research On Legal Issues Of Share Repurchase

The Company Law of the People’s Republic of China(hereafter this text will be abbreviated as the newly revised Company Law)revised by the Standing Committee of the National People’s Congress on October 26,2018 has undergone substantial revision in the aspect of share repurchase.In order to play the role of share repurchase in optimizing the equity structure,improving the share price and stimulating the securities market,three new reasons for repurchase have been added,decision-making procedures have been simplified,and shareholding period has been extended in response Market and the needs of all parties.However,share repurchase is a special way of share transfer.There are still some problems in the revised system under the legislative mode of principle prohibition and exception permission.As the most striking cause of this amendment,there are more or less practical problems in equity incentive plan,convertible corporate bonds conversion and repurchase for the sake of safeguarding the interests of the company and shareholders’ rights and interests,such as vague scope of incentive objects,conflict between conversion and repurchase effects,and quality identification,etc.under the imperfect legal system,the problems that are ignored and about to occur will be handed over to the market.There is no doubt that it’s hard for the main body of the market and the immature securities market to digest themselves.Similarly,in the decision-making maker,the procedure is simplified,and the board of directors joins in the decision-making camp.However,on the premise that the shareholders control the repurchase behavior is not restrained,the joining of the board of directors aggravates the original insider control problem.In addition to the regulation of the article itself,the amendment again omitted the regulation of treasury shares and legal consequences.Legislators have been hesitant about treasury shares,and have not given them a place in many amendments.This time,the shareholding period of repurchase shares due to new reasons has been extended to three years,and the actual state of treasury shares can not be ignored.How the legal status of this part of shares still needs to be explored by all market subjects in practice.At the same time,as a complete legal system,the legal consequences of the repurchase of the violation must be considered.The judgment of the action effect and the formulation of the civil liability mechanism not only affect the implementation of the share repurchase system,but also affect the judicial organ’s determination of specific cases.