Research On Class Share System In China

The 32nd meeting of the Standing Committee of the 13 th National People’s Congress deliberated on the company law of the people’s Republic of China(Revised Draft)and solicited public opinions on December 27,2021.After the pilot work of preferred shares and differential voting shares on the science and innovation board,China’s classified shares system will be officially determined at the level of company law.China adopts the same legal model as South Korea for the class share system,that is,the previously published draft stipulates the types of class shares that can be issued by the company.Before the Korean commercial law was formally revised to determine the class share system,in order to ensure that enterprises can easily carry out capital raising activities,as an exception to the principle of equality of shareholders,South Korea allows the issuance of shares with different property rights(distribution of profit and residual property distribution),and the types of shares that can be issued include preferred shares,inferior shares and mixed shares.This is also similar to the pilot work of individual class shares in China.Therefore,the Korean class share system introduced and continued in the Korean Commercial Law in 2011 has a certain reference significance for the improvement of class shares in China.At present,there are some problems in China’s classified share system,such as fuzzy regulation of the operation of classified shares,many restrictions on the issuance of classified shares,imperfect protection system of classified shareholders and so on.These problems have also become the constraints of the practical application of China’s class share system.Therefore,starting from the basic concept of class shares,based on the analysis of the legislation and practice of class shares in China,and drawing lessons from the relevant design of Korean class shares system,this paper puts forward some suggestions on the improvement of class shares in China.Firstly,at the legislative level,China’s class share system should refine the relevant provisions of the company law and make detailed provisions on the issuance time and proportion of class shares.In terms of the specific setting of class shares,China should give companies more choice space and add conversion shares in the existing class shares to meet the needs of the capital market.In terms of the special regulation on the specific application of class shares,China should improve the class share system from the perspective of combining with the company law and securities law,give full play to the regulatory attribute of the securities law under the framework established by the company law,and gradually broaden the scope of application of class shares in the capital market.Secondly,in view of the relevant regulations on the issuance of class shares,China should reduce the threshold for the issuance of class shares and find a balance between corporate autonomy and national regulation,so as to make the limited conditions and issuance rules for the company’s financial situation more reasonable,such as reducing the limited conditions for the qualification of the issuing subject.Finally,China should establish a perfect category shareholder protection system.In terms of clarifying the resolution system of class shareholders,the resolution matters should be treated in two ways.They should be distinguished according to the change of class equity and the related matters of shareholder damage.Because the change of class equity is directly related to the attribute of the rights of class shareholders,it should be set as 3 / 4 absolute majority.In terms of constructing the voting right restoration system of class shareholders,China should adopt mandatory provisions,that is,companies are not allowed to deprive class shareholders of the right to restore their voting rights through articles of association and other forms of arrangements.In terms of the share repurchase system of class shareholders,the scope of repurchase should be limited to the extent that it does have an adverse impact on the interests of class shareholders.If the resolution is beneficial to the interests of class shareholders,there is no need to start the procedure of share repurchase.