Study On The System Of Convertible Class Shares

Convertible class share is one of the most common and important class share types.It refers to the class of shares that can be converted into other shares under certain conditions when a company issues more than two kinds of shares.Chinese legislature has made an attempt to legislate convertible class share system but has not systematically constructed convertible class share system.Chinese companies have a great demand for convertible class shares represented by convertible preferred shares,but they are stuck in the uncertainty caused by the absence of legal regulation.The Company Law(Draft Amendment)clearly stipulates the class share system for the first time,but only stipulates that a company limited by shares may issue class shares,and does not include convertible class shares into class shares.The first chapter is the development and institutional value of convertible class shares.Convertible preferred share originated from the practice of companies in UK in the 17 th century.Because of its convertible characteristics,convertible preferred share has been widely used in the field of venture capital in America.Before the revision of the Company Law which clarify the class share system of companies limited by shares,Chinese legislation was cautious about class shares,and administrative regulations and department rules only made some tentative legislative attempts on the convertible class shares.Common forms of convertible class shares and their functions include convertible preferred share as a vehicle for private equity investment,anti-dilution arrangements for private equity investments,and poison pills as a means of takeover defense.It can not only stimulate the enthusiasm of investment and financing,enhance the vitality of the capital market,but also provide effective tools for the acquisition defense means of the company to protect the interests of the company.Chapter two analyzes the legislative path of convertible class shares from the perspective of company type.Firstly,the construction of convertible class shares legislation should proceed from the value orientation of shareholder autonomy and shareholder equality.There are structural problems in the classification of basic company types in our Company Law.Based on the characteristics of company publicity,the construction of convertible class shares system should proceed from the classification of closed companies and public companies,give closed companies greater autonomy authority,and adopt the legislation path of autonomy of articles of association.The public company should be strictly regulated and the legalism legislation should be adopted.Chapter three is the legal regulation construction of convertible class shares conversion mechanism.The conversion mechanism includes the conversion direction,conversion condition,conversion price and the determination method,and conversion procedure.In terms of the development of the practice and legislation in various countries(regions),this article explores the legislative direction of legal regulation for constructing the conversion mechanism of convertible class shares in our country.The fourth chapter is the shareholder protection mechanism under the convertible class share system.The conflict of interest in the context of convertible class shares is reflected in the horizontal conflict of interest between shareholders of convertible class shares and other shareholders,and the vertical conflict of interest between shareholders of convertible class shares and directors.In order to deal with conflicts of interest in advance,a class voting system should be established,and the increase,decrease and cancellation of conversion rights should be clearly listed as class voting matters.In order to remedy the conflict of interest,the fiduciary duty system should be constructed,including fiduciary duty between class shareholders and fiduciary duty of directors to shareholders of convertible class shares.