On The Voting Rights Regime For Classes Of Preference Shares In China

Preferred stock differs from common stock in that it is the most typical type of class share in our country.Preferred stockholders,as class stockholders,can exercise a certain degree of voting rights in some corporate matters decisions.Preferred shares are favored by investors by satisfying the preferences of risk-averse investors with the stability of returns as a significant advantage.In the system of class share system,the system of class voting rights of preferred shares is a very crucial system to safeguard the rights and interests of class shareholders and realize the balance of shareholders’ interests of different classes of shares and between class shareholders and general shareholders.In the respect of the rights and interests of class shareholders,the class shareholder voting system is a way to defend their rights and interests in the context of "capital majority rule".This system,which uses major shareholders to take power,is for that sorts out to deal with problems about operating companies due to conflict of interest fall in between the majority and minority shareholders,thus realizing the substantial equality of shares.However,to date,China has not yet provided for the issuance and trading of preferred shares in the Company Law,and there is a lack of clear regulations in the relevant rules and regulations as to the circumstances under which the voting rights of the preferred share class apply and how to exercise such rights specifically.With the introduction of Article 144 of the Company Law(Second Review Draft of the Revised Draft)in 2023,which for the first time clearly established a specific class share system in joint stock companies,and the relevant provisions of the Preferred Stock Pilot Management Measures(2023 Amendment),although the Law clearly established a specific class share system,there are only a few brief provisions for the voting rights of the preferred stock classes and there are some legal loopholes,and there are no additional provisions for There are also no additional provisions on specific issues.Therefore,it plays a key role to enhance the system of voting rights of classes of preferred shares in China.This article examines the legal issues of the preference share voting system through normative analysis,comparative analysis and case studies,draws on foreign legislative experiences and actual national conditions in China,analyses in depth ways to improve the preference share voting system,examines and analyses both substantive and procedural provisions to make rational recommendations that clarify ideas to improve the systems.It also provides clear insights on how to improve the preference share voting system and aims to improve the rights and interests of preference shareholders in the future.The first part is the background and significance of the research on the voting rights of preferred stock classes,and the academic views of domestic scholars on the voting rights of preferred stock from different dimensions,and the comparison of foreign experts’ views on the voting rights of preferred stock to analyze the relevant theories more comprehensively.The second part is an overview of the voting rights of the preferred share class.Firstly,the definition,meaning and classification of the preferred class voting rights are discussed,and the differences between the preferred class voting rights and special voting rights are compared.Then,the value of preferred class voting rights and relevant cases are analyzed to highlight the significance of preferred class voting rights.The third part is the current situation and problems of the preferred share class voting system in China.The current status of China’s existing preferred share class voting system is analyzed from the theoretical and institutional levels.At the same time,it is proposed that at the present stage,there are problems such as unclear application criteria,unreasonable voting rules,irregular voting procedures and imperfect judicial remedies for the preferred share class voting right.The fourth section uses extraterritorial legislation on the voting system for preference shares.Unlike domestic legislation,Japan,the US,Germany and the UK have clear rules on the scope of the preference share voting system.We will analyse the different national legislation on preference share voting and use the relevant legal provisions to improve our regulatory framework.The fifth part is the improvement of the preferred share class voting system in China,which is the key part of this thesis.This is the key part of this thesis.We will mainly optimize the preferred share class voting right system in three aspects in more detail.Firstly,the scope of application of the preferred share class voting right in China should be clarified,and detailed delimitation should be made to reduce the mandatory provisions,consider the interests of preferred shareholders and provide for capital adequacy in the company’s articles of association.Secondly,regarding the appropriate construction of voting rights provisions for preference shares in China,the standard is to improve the combination of mandatory and discretionary rules in the legislative model in order to appropriately construct and protect the reasonable interests of shareholders.Thirdly,to regulate the voting procedures of the preferred share class,the establishment of independent directors to protect the interests of preferred shareholders from infringement,the establishment of sound voting requirements,and the improvement of the system of exclusion of shareholders’ voting rights.Fourth,to improve the judicial remedy mechanism for class voting of preferred shares in China,the two mechanisms of litigation remedy mechanism for class shareholders’ meeting resolutions and restoration mechanism for class voting rights are refined.