Share reform and warrant effectiveness: the consideration paid by shares does not comply with the law

In terms of the specific implementation plan of the split share structure reform, the current dominant view is that the holders of non tradable shares must pay the consideration to obtain the circulation right. The theoretical basis of consideration is the so-called split premium. Someone said, "As far as major shareholders are concerned, the consideration should be from their own

　　 Shares legally owned by anyone are protected by law

The author believes that before discussing the consideration, we must first answer an unavoidable fundamental legal question, that is: Do the holders of tradable shares have the legal right to require the holders of non tradable shares to pay for their own shares? In other words, do the holders of non tradable shares have the legal obligation to pay their own shares to the holders of tradable shares? The answer is no. Regardless of the starting point and intention of this specific implementation plan, requiring payment of consideration violates the protection of property by law, so it must be stopped.

The law should protect the shares owned by all shareholders without discrimination. Therefore, both tradable shares and non tradable shares should be protected by law. Our Constitution clearly stipulates that state-owned assets are protected and citizens' legitimate private property is inviolable.

Recently released to the whole society《

Therefore, both tradable shares and non tradable shares; Non tradable shareholders, whether they are state-owned enterprises, private enterprises or private individuals, their legally owned properties, including non tradable shares, are protected by law.

Price is only one of the basic attributes of property, not all of them

As the stock market is changing rapidly, many factors may affect the fluctuation of stock prices. One of the pre requisite notices of the stock market for any shareholder to enter the market is the risk of the stock market and the fluctuation of stock prices.

As far as the shares of listed companies are concerned, the law protects the shares legally owned by shareholders, rather than the price of shares. As long as shareholders legally own shares, the law should protect them, whether they are large shareholders or small shareholders, whether they are tradable shareholders or non tradable shareholders. Any act that infringes the shareholders' ownership of legally owned shares, such as depriving shareholders of their ownership of shares without reason, preventing shareholders from exercising their legitimate rights without reason, etc., violates the provisions of the law and is not allowed by the law.

Price is only one of the basic attributes of property, in addition to other basic attributes, such as the right to dispose, the right to transfer, the right to inherit, and so on. Similarly, the price of a stock is only one of its basic attributes, but not all of its attributes. Other basic attributes include voting right, usufruct, disposal right, transfer right, inheritance right, etc. Depriving shareholders of their shares not only deprives them of their ownership of stock prices, but also deprives them of all other attributes of stocks.

　　 Circulating shares do not have the exclusive right and exclusive right to circulate shares

The protection of non tradable shareholders should not be based on depriving non tradable shareholders of their legally owned shares. The tradable shares do not have the exclusive right and exclusive right of stock circulation.

In fact, there are no laws, regulations or contracts, or clear institutional arrangements, or legally binding commitments that prohibit the circulation of non tradable shares, including state-owned shares, or stipulate that non tradable shares must pay consideration to obtain circulation.

Therefore, the tradable shares do not have any exclusive rights and exclusivity on the circulation of shares expressly granted by any laws, regulations or contracts, nor do they have the power granted by laws to prevent the non tradable shares from obtaining the circulation rights. In the reform of non tradable shares, new rights cannot be created out of thin air, nor can new obligations be imposed out of thin air.

"The cost of holding non tradable shares" and "the appreciation expectation of non tradable shares after circulation" cannot be used as the relevant basis for stock payment. Some people believe that the price paid by the holders of non tradable shares is not very high relative to their original holding cost, so it is reasonable to pay for shares. Others believe that the price paid by holders of non tradable shares is small, because the accounting cost of the original share capital used for payment is very low compared with the expected appreciation of circulation. Although they have fewer shares, the remaining shares can appreciate after circulation. Neither of these arguments can stand the test of law. It is impossible for the law to regard "the cost of holding non tradable shares" and "the appreciation expectation of non tradable shares after circulation" as the relevant basis for payment of shares.

If the demand for payment of shares sets a precedent, the consequences will be unimaginable. If the theory of requiring payment of shares is established and constitutes a precedent, it will break the protection of property by law and in essence constitute deprivation of property. The society may also invoke this precedent, and many phenomena that cannot be allowed by law will occur.

For example: 1. When the government cancels the boundary between export housing and domestic housing, the owner of export housing can ask the owner of domestic housing for consideration; 2. When the government decides to add a special economic zone, the first special economic zone approved for establishment can ask for consideration from the newly established special economic zone; 3. When migrant workers enter cities for employment, urban residents can ask migrant workers for consideration. And so on.

　　 The split share structure is an institutional problem, and there should be institutional solutions

It is worth noting that the CSRC《 Circular of The State Council of The People's Republic of China on Relevant Issues concerning The Pilot Reform of The Share trading of Listed Companies 》It is only a procedural provision and does not stipulate the substantive content of the implementation plan.

Some people believe that "the quality of any substantive operation plan depends entirely on the judgment and approval of the relevant shareholders of the specific listed company. This is not something that outsiders can identify on behalf of the parties." Some people believe that the holders of tradable shares have the veto power. If the holders of non tradable shares dilute their shareholding ratio, or greatly dilute, or even lose their controlling position because of the payment of shares, "No matter whether or not it is diluted and how much it is diluted, it is the result of market-oriented competition, and the parties can not dispute it and cannot refuse and regret it afterwards". Some people believe that the holders of non tradable shares will be the beneficiaries, and it is necessary for the beneficiaries to give away part of their interests and give their shares to the holders of tradable shares in order to safeguard the principle of fairness, impartiality and fairness. These are unacceptable in a socialist market economy that is strengthening legal construction and property protection.

In China, any legal property rights should be fully protected by law. If there is any dispute between the parties on property rights that cannot be resolved, any party should have a firm assurance and reasonable expectations to resolve the dispute through administrative or legal means. Let no one have any doubt or worry that the government or the legal system will let go, or allow the parties to take matters personally. If there are any such doubts or concerns, the government and the legal system will immediately and thoroughly dispel them.

The issue of non tradable shares is a systemic one, and there should be a systematic solution. At the critical moment of building a harmonious society, the legal relationship of property should not be disturbed, and the conflicts and disputes between shareholders should not be provoked.

The author also does not approve of using the means of stopping refinancing of listed companies to coerce non tradable shareholders to pay for shares. As we all know, under normal circumstances, the refinancing of listed companies should be completely decided by the market. If a listed company has illegal acts, the regulatory authorities can prohibit it from refinancing. Non tradable shareholders should not be coerced to pay for shares by means of stopping refinancing of listed companies.

In the reform of non tradable shares, we must make clear the major issues of right and wrong, strictly abide by discipline and law, and ensure that legal property is inviolable. In the ongoing exploration of the theory and practice of the split share structure reform, as long as we grasp the principle of the law, clarify the legal relationship of property, and use market-oriented methods, we can fully take into account the legitimate interests of all parties, complete the split share structure reform, and create conditions for solving other major problems in China's capital market, It has made great contributions to the reform and development of China's capital market.

(The author is a doctor of law from Yale Law School and a director of China International Cultural Exchange Center.)

Editorial Reviews

Dr. Gao Zhikai's contribution does not involve

Author: Gao Zhikai, Special Author of this newspaper