On the System of Listed Company Share Buyback

Abstract repo refers to listed companies use cash, etc., from the stock market to repurchase the Company's outstanding behavior of a certain amount of stock, company and shareholders equity transfer between an internal act, the 1990s were the introduction of China's capital market. This paper introduces the company's stock buyback system overview, and the pros and cons of this system for assessment, then the introduction of a number of countries or territories outside the relevant stock repurchase market access and other relevant provisions, based on the analysis of the Chinese stock return Development and Legislation purchase. In this paper shortcomings of its existing legislation put forward a series of targeted improvement measures, so that China's securities market operations more standardized.

Paper Keywords stakeholders stock repurchase Act

First, the company's stock buyback system overview

(A) The concept stock repurchase stock repurchase is a listed company use cash, etc., from the stock market to repurchase the Company's issued and outstanding shares of a certain amount of behavior. After completion of the company stock repurchase repurchased shares may be canceled, as 'treasury shares' hold. Stock repurchase is a listed company with shareholders an act, is to adjust the company's capital structure and the adjustment of market liquidity on the stock as a way to shareholders, the company will have some impact.

(Two) share buyback legislation and necessity from among the company's stock repurchase legislative historical trajectory, the majority of national legislation in general has gone from law does to the exceptions permitted by the laws and regulations are also precedents or simple generalization provisions to the detailed provisions. In China, the share buyback is a new development of things, so the relevant aspects of the system is still not perfect legislation for the legislative status of China's stock repurchase the problems, China needs to strengthen its efforts on the stock buyback legislation to be improved.

In China, the share buyback is split share structure reform in the context of the proportion of state-owned shares in order to solve internal control over Japan and other equity irrational structure in the 1990s and introduced. May 2005 the Commission relating to the public for stock repurchase way an attempt to solve the tradable predicaments. June 16, 2005, the Commission issued a 'buy back the public shares of listed companies management approach (Trial)', to the listed company's stock repurchase provides the appropriate code of conduct. 'Company Law' have also been revised for the smooth progress of share buy-back provides a good legal environment.

Stock repurchases as an adjustment to equity capital structure and capital structure works, listed companies in China has a special significance. Perfect Legislation stock repurchase, to be able to Chinese listed companies and the stock market issues unique to provide legal protection. Meanwhile, the listed companies in the stock buyback process there are a variety of problems, such as listed companies stock repurchase makes the company's registered capital reduction, share between the Company and the controlling shareholder will have related party transactions, the interests of minority shareholders will be damage. These problems, making the perfect stock repurchase Legislation become necessary, in order to solve the problems that exist in reality.

Second, China's development and the company's stock repurchase existing legislative Comment

(A) share buyback in the development of our country in the process of China's economic development, the planned economy dominated enterprise in the form of state-owned enterprises is almost, there is less of the main forms of joint-stock companies, and therefore there will be no share buyback this phenomenon. However, with the implementation of the system of reform and opening, China's economic development level and economic development has been upgraded. In order to conform to the trend of economic development, China's enterprises in the joint-stock reform, and this was accompanied by stock market scale has been expanded. Run for the securities market in the process of emergence of new things, China's relevant laws and regulations were also made, especially for stock repurchase issue.

Repurchase of shares of listed companies first began in 1992, that is the great Yuyuan Yuyuan by agreement of all the stock repurchase small events, 1994 Lujiazui repurchase agreements after the issuance of state-owned shares B shares in 1996, Xiamen International Trade repurchase capital reduction, 1999 Yuntianhua part of state-owned shares with Shennenggufen successful buyback - which in that year to become a highlight of the securities market. After the 'Company Law' limited, long-term bear market, the lack of cash, stock repurchases began to decline. 2005, listed companies in the equity division reform, driven by the words 'listed company to buy back shares in the public management approach (Trial)' The introduction and the 'Company Law' appropriate modifications in the content, making the stock buyback has been developed , Handan Iron and Steel shares into tradable shares buyback first, followed by the addition of a lot of stock repurchase cases, this capital works in our increasingly favorable policy environment has been developed.

(Two) on the repurchase of company stock Legislative Defects of View From the above laws and regulations can be seen on our current stock repurchase provisions are only general provisions of principle, more general, broad, operability is not Strong. Supporting legislation, implementing rules or specific operational methods are not introduced, the face of the current stock repurchase cases have emerged, building regulations somewhat lagging behind. For the stock repurchase limit the scope to be too restrictive, contrary to international legislative trends, and also limits the development of listed companies, For some of the provisions in a more vague definition, this will encourage the behavior to circumvent the law to make provision useless. If you do not regulate the system of the regime, the regime itself drawbacks will gradually appear, but may become obstacles to improve the corporate governance structure. Therefore, in order to adapt to the reality of China's capital market needs, to remove legal barriers to the stock buyback, the company's rapid development and the protection of legitimate rights and interests of minority shareholders successfully achieve this objective, our country must quickly establish a sound legal system of share buybacks.

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Third, improve the company's stock buyback legislation of a number of recommendations

(A) improve the information disclosure system, the basic characteristics of the modern enterprise is separation of ownership and management, the investor's ownership, and operators have the right to operate, so the operator to obtain information on the operation has certain advantages, if the operators in order to pursue their own interests, it is possible to distort the disclosure or non-disclosure of relevant information, if corporate governance is imperfect, it may appear in the stock buyback insider trading and therefore improve the information disclosure system is an important part.

(Two) to strengthen the protection of the stakeholders of the capital market information asymmetry, making the minority shareholders at a disadvantage on the mastery of information, the right to vote at shareholders' meetings and in a minority, large shareholders and minority shareholders exists between information and interests asymmetry, minority shareholders can only passively accept the stock repurchase program. Therefore, from the following three aspects should be to ensure that the interests of minority shareholders are not infringed: First, improving the share repurchase information disclosure system, various stakeholders relative fair access to information resources; Second, the interests of dissenting shareholders the right to request compensation measures; three Is the voting stock repurchase program redesign, both in the 'one share, one authority' under the principle of legal through several, but also the consent of a majority of minority shareholders, at least two-thirds, and the related shareholders of listed companies shall comply with avoidance system, by the non-associated shareholders of the stock repurchase matters independent vote. In addition, a listed company buy back shares when the best way of using the offer, because it more prominent equality, not favoritism in the big shareholder or controlling shareholder. The repurchase price should be based on the flow of the stock market price of listed companies and performance status to be determined by determining a reasonable price to protect the interests of small shareholders.

As regards the protection of the interests of creditors, the company should be required before conducting repo creditor must first seek the views of the company can be used to provide security for the creditors raise interest rates or the way to get the consent of the creditor or creditors to full participation in the buy-back program development Its one-vote veto.

(Three) specifically applicable conditions First, from the implementation of equity repurchase the external environment, must be the company's share price is relatively low when you can repurchase, if capital markets are more active in the company's stock position is reasonable or even overvalued, a listed company on the repurchase its own shares lost enthusiasm. Secondly, a listed company must have sufficient cash or cash flow, with significant idle cash or cash flow, making the company to repurchase the company's own shares does not affect the normal operations. In order to protect the interests of minority shareholders, but also can clear the following conditions: (a) minority shareholders who oppose stock buyback, you can notify the company in writing against such matters; (2) that the requesting shareholders may mean buying their stock; (3) Shareholders General Assembly resolutions voted against the motion. At the same time, for different purposes of repurchase repurchase behavior, its provisions should be different conditions. In practice, it should develop the implementation details from the company's financial statements to observe whether the company has stock repurchase conditions.

(Four) complete the relevant Act provisions on share buybacks in addition to the above-mentioned aspects of the improvement measures, China's Company Law also available from stock repurchase way, prices, sources of funds and for objects to be perfect, as follows:
1 stock repurchase: the 'Prospectus Directive listed companies' share buyback approach should include further specific, such as repurchase agreements methods on non-tradable shares buyback is very suitable.

2 stock repurchase prices: Because of the presence of state-owned shares and tradable shares, and the two-tiered system, so the two repurchase price determination should be distinguished. For state-owned shares, share repurchase price per share should be the basis of the intrinsic value of state-owned shares of state-owned shares is equal to the intrinsic value of the net asset value per share plus a premium; For outstanding shares, the repurchase price is determined generally a certain multiple of earnings {P refers to a study period (usually 12 months), the stock price and earnings per share ratio of the standard or the market price, a certain period, the average price or the highest price as the standard.

3 stock repurchase is intended: our current stock repurchase subsidiaries are not included in the management, so our 'Company Law' should be required when the subsidiary by the parent company's shares, it should apply equally share buyback restrictions .

IV Conclusion

Stock buyback system produced in mature capital markets for the company to adjust the capital structure and improve operations by providing a new direction, as China's booming development of securities and financial markets, stock repurchase increasingly sought after by Chinese companies its right to prevent insider trading companies to prevent hostile takeovers and to protect the interests of minority shareholders has a positive effect. Based on this considerations, then Throughout China's current laws and regulations of the stock buyback, can be found in the legal protection for the stock repurchase is not very robust, it is difficult to play the system, its potential. So for this system should also be more specific to be perfect - refine the method of determining the price, perfect repurchase program, to strengthen information disclosure, thereby eliminating some of the inequities occur, for repurchase of shares should be 'treasury shares 'form or in another form, which needs further study, at least in improving the traditional legal system under the premise. Although necessary to improve the existing legal system would contradict with the relevant principles, such as the capital of three principles, rules prohibiting withdrawal of funds, but a complete system should be up from the overall considerations, should be able to meet the development of China's socialist market economy With the continuous development of economic infrastructure to improve laws and the superstructure, so that China's stock market can be more healthy and steady development.

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