Manipulation Regulations In The Listed Company’s Share Repurchase

From the perspective of China’s legislation,the share repurchase behavior operated by the listed company is regarded as an exception to the market manipulation.In practice,even if the company operates in accordance with the law,it still has the risk of being questioned to manipulate the market.Therefore,the disconnection between the legislative purpose and the practical effect makes us have to re-examine the legislation.The key to solving this problem lies in understanding the connection between share repurchase and manipulation of the listed company.This article starts with the basic theory of share repurchase of the listed company and manipulation.Share repurchase is essentially the transfer of shares between the company and shareholders.It contains both the act of credit of signing the share repurchase contract and the real right behavior of performing.And,the essence of market manipulation is fraud.Tend towards the profit and concealment form in manipulative motivation during the process of share repurchase.Overlap of behavior patterns,the results of action similarity and difficulties to demonstrate the purpose of behavior jointly contribute to the suspicion of manipulation.Thus,these factors cause the complex relationship between the share repurchase and manipulation.In order to guarantee the fair competition mechanism of securities market,and protect the legal rights of the listed company,manipulation regulations in share repurchase are very important.Through Venn diagram,we know that the legal share buyback excludes the market manipulation liability,and the illegal share repurchase is intersected with manipulation.In this way,it provides two directions for the manipulation regulations in the share repurchase of the listed company.First,establish a set of "safe harbor" rules for the share repurchase to confirm in port operation’slegal efficiency.Second,we should actively prevent the listed company from using share repurchase to manipulate the market from the inside of the company.Also,if the listed company manipulated the market,we could use administrative responsibility and civil liability to punish.According to the above thinking,this paper focuses on the manipulation regulation methods in share repurchase of listed companies.First,drawing lessons from the "safe harbor" rules of the United States and the European Union,establish a stock repurchase "safe harbor" for listed companies in China’s securities market.The establishment needs to consider the following factors:Firstly,whether distinguish rules due to the different way of share repurchase.Secondly,it is necessary to specify the conditions of the "safe harbor" rules for share repurchase in listed companies,and distinguish them from the general procedural conditions.Thirdly,confirm the autonomy effect of the "safe harbor" rules in the selection of apply and non-applicable results.Second,strengthen the internal institutional constraints of listed companies.The improvement of the supervision system of supervisory board mainly consists of the following three aspects.Firstly,learning from the German company law,let supervisory board play an important supervision role on the share repurchase procedures,plans and the actual execution.Secondly,change the representative supervision to independent supervision.By the improvement of the selection program and the dilution control of large shareholders,select independent and suitable person,and hold accountable for illegal operation.Thirdly,supervisors should become professional,otherwise they can’t give professional advice for share repurchase in the way,the price range,pricing principle,types,quantity and proportion.The supervision of independent directors is a restriction on the exercise of power of major shareholders.On the one hand,the independent directors can vote in the meeting of the board to restrict decision superiority of directors,and by making the share repurchase into the substantial connected transactions,the independent director recognition will be a precondition of the board of directors.On the other hand,the dissenting opinions of independent directors shall be given veto power.Even the company has passed the implementation of share repurchase,the independent directors can also disagree with share buybacks,to "impede" market manipulation of the board of directors.Third,we should punish manipulation in share repurchase,from the two aspectsof administrative responsibility and civil liability.On the one hand,explain "the uncertain information" in demagogic trading manipulation.The information can be uncertain now,or may be come true if some conditions are met in the future.At the same time,the information should be important,which can influence investors’ decisions.So,when the listed company announced share repurchase plan,and manipulate the stock price not to reach the buyback condition,its behavior could be identified as demagogic trading manipulation.In addition,the core of the demagogic trading manipulation lies in misleading investors by information means,rather than forcing the actual transaction between the actor and the investor.The regulation of special manipulation behavior in share repurchase of listed companies needs to be improved according to the typical cases in the future.On the other hand,securities law in our country has set up the civil liability of market manipulation,but the legislation of the civil compensation mechanism is still in a blank state.It is the first step to improve the civil compensation mechanism by explicitly manipulating the civil liability category of market behavior.In essence,the civil liability for manipulation is a tort liability,which contains the four constitution requirements,such as the illegal behavior,the harm of the facts,the causal relationship and the subjective fault.The process of perfecting the civil compensation mechanism of market manipulation is the process of establishing these.First of all,the plaintiff can start the civil compensation mechanism after CSRC’s identification,so as to reduce the burden of proof on the defendant’s illegal manipulation.Secondly,calculating an average stock price closed at ten business days before manipulation,with the plaintiff actually buying or selling the stock price difference,the price spread is what the plaintiff shall be entitled to compensate.Thirdly,in order to protect the interests of investors,the burden of proof of causality should be inverted.The defendant is liable to prove that there is no causal relationship between the plaintiff’s loss and his behavior,otherwise it is considered causality.Finally,judge the subjective fault of the defendant by combining with the source of funds,income attribution,transaction timing and mode.Besides the above four elements need to be concrete,clearing the scope of the plaintiff is important.Only those investors who are actually involved in the securities trading and harmed by the defendant’s manipulation can be the subject of the plaintiff.At the same time,the plaintiff should not be required to have the goodwill to not know the manipulation.To sum up,this paper mainly focuses on the manipulation regulation of sharerepurchase in listed companies from three perspectives: the establishment of "safe harbor" rules,the internal supervision system of the company and the regulation of manipulation in share repurchase.The manipulation regulation in the share repurchase of the listed company is of great research significance.