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The Decision of the Standing Committee of the National People's Congress on Amending the Company Law of the People's Republic of China was adopted at the sixth meeting of the Standing Committee of the 13th National People's Congress on the 26th, which specifically revised the provisions of Article 142 of the Company Law on share repurchases of companies and came into force as of the date of promulgation. The CSRC said that it would conscientiously implement the Revised Decision, regulate and support the share repurchases of listed companies in accordance with the law, strengthen supervision and law enforcement, and strictly investigate and deal with illegal acts such as insider trading, market manipulation, illegal information disclosure, "interest transmission", "flickering repurchases", etc. by using share repurchases in accordance with the law.
The Revised Decision further consolidated and improved the basic system of the capital market, provided strong legal support for promoting the stable and healthy development of the capital market, helped improve the quality of listed companies, helped improve the financial capital management system, deepened financial reform, helped protect the rights and interests of small and medium-sized investors, and promoted the sustainable, stable and healthy development of the capital market.
The CSRC said that in order to implement the revised Company Law, the CSRC will systemically sort out the rules on the share repurchase system of listed companies, strictly implement those that continue to apply, timely improve the corresponding supporting system rules for the new requirements proposed by the amendment of the Company Law, and further clarify the situation, procedures, methods Information disclosure, holding of repurchased shares, transfer of repurchased shares, cancellation of repurchased shares, etc.
The CSRC proposed that the relevant listed companies and their controlling shareholders, actual controllers, directors, supervisors, and senior managers should strictly abide by the Decision on Amendment and relevant system rules, modify the company's articles of association accordingly, improve the internal management system, implement share repurchases in accordance with the law and regulations, and ensure that share repurchases do not damage the debt performance ability and sustainable operation ability of listed companies.
The CSRC said that it would strengthen supervision and law enforcement, strictly investigate and deal with illegal acts such as insider trading, market manipulation, illegal information disclosure, "benefit transmission", "dodgy repurchase", etc. by using share repurchases in accordance with the law, earnestly maintain the order of the share repurchase market of listed companies, and give play to the positive role of the share repurchase system.
According to the number of stock repurchases and the scale of stock repurchases in history, there have been five stock repurchases in the A-share market so far, four of which occurred during the downturn of the stock market. Share repurchase is generally considered to have a good role in boosting the market when the stock price is low. The basic logic is that the repurchase will reduce the total amount of equity and increase the earnings per share when the net profit remains unchanged. Therefore, repurchase is also regarded as a return to shareholders, which is favorable.
But at the same time, the use of treasury shares and the abuse of share repurchases may raise questions about insider trading and market manipulation. At the same time, there may be inequality between shareholders in the process of repurchases, as well as the use of treasury shares to achieve some anti takeover functions.
Fu Lichun, the research director of Northeast Securities, said that since repo often affects market value management, from the company's disclosure of the repo plan to the later implementation and execution, timely information disclosure should be carried out. In addition, from the perspective of protecting the interests of investors, the regulatory authorities should also strictly supervise the way of repurchase of listed companies, the source and destination of repurchase funds, and strictly investigate, punish and punish the companies and interested parties who have violated laws and regulations, and clarify the degree of strict supervision. The opinion of this article only represents the author himself. If the source of the article is a network reprint, this website is an information publishing platform. If there is infringement, please contact this website to delete it in time.
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