Case Analysis On Share Repurchase

The Stock-Repurchase legal system is an institutional innovation in the history of theCompany Law development. The system plays an important role not only in balancing theinterests between shareholders and companies but also in protecting the legitimate rights andinterests of small shareholders. It is an effective mechanism for the shareholders who are inthe weak position choose to withdraw from the company. However, this system is evenyounger than our country’s young company Law in the history. There are different opinionson the provisions of this system in theoretical circles. There were also many difficultproblems in judicial practice. The share repurchase dispute is an obvious example betweenBeijing Jingchen Real estate investment Co., Ltd.(hereinafter abbreviated as "Jing ChenCompany") and Beijing Huashang Properties Co., Ltd (hereinafter abbreviated as "HuashangCompany"). Therefore, this paper attempts to do in-depth analysis of the stock-repurchasesystem. It hopes that this paper can improve the share repurchase system on the basis ofanalysis of this case from a theoretical and practical point.This thesis is divided into three parts:Part one is case background. In this part, the author firstly reviewed the stock repurchasedisputes between Jing Chen Company and Huashang Company, and then commented on courtdecisions, at last extracted the controversial focus of the case.Part two is the fundamental theory of law. This section is the theoretical basis of analysisof this paper,which support the section of case studies of this paper. The author analyzed itmainly from two aspects, namely the determination of the concept of share repurchase and thetheoretical basis of stock repurchase. In the part of theoretical basis of share repurchase, theauthor analyzed the share repurchase system, mainly from four aspects, namely, the theory ofcontract freedom, the theory of balance of interests,capital majority mechanisms and theorganizations of company group.Part three is case studies and recommended practices. This section is the most importantpart of this paper and attempts to innovate. First of all,the author analyzed the the focus ofcontroversy of the case in the paper,mainly from two levels, namely the share repurchaseclaim application of the law, the determination of the price of share repurchase. After that,thelegislation of the share repurchase legal system were investigated, and the legislative status quo and defects of Chinese share repurchase were analyzed. Finally, from four aspects,namely: the body of the share repurchase for the application, the scope of application of sharerepurchase, the application of the share repurchase program and the determination of equitybuy-out price, the author put forward its own proposal on China’s equity buy-back systemand given the conclusions of the case studies on the basis of analysis on the paper.