Research On Share Repurchase System From The Perspective Of Corporate Distribution

The capital flow of share repurchase is the flow of company assets to shareholders,so share repurchase belongs to a specific situation of company distribution.After the revision of the "Company Law of the People’s Republic of China"(hereinafter referred to as the "Company Law")in 2005,the regulation of the share repurchase system adopted a "principle prohibition,exception permission" model,opening the door for Chinese companies to repurchase their own shares.Share repurchase can optimize a company’s capital structure,motivate internal employees,prevent hostile takeovers from outside,and protect the interests of small and medium-sized shareholders.In the short term,the company uses its funds to purchase its own stocks,greatly improving the value of its stocks,sending a positive signal to the market,ensuring the actual control of the company,and preventing malicious acquisitions.This has a positive effect on the company,shareholders,creditors,and even the entire capital market.However,the share repurchase system can also easily undermine the principle of shareholder equality and the principle of capital maintenance.When controlling shareholders illegally distribute company assets,it is extremely easy to harm the rights and interests of other small and medium-sized shareholders,causing chaos in the capital market.Despite this,share repurchase still plays its unique value in the capital market.The "Company Law of the People’s Republic of China(Second Review of the Revised Draft)"(hereinafter referred to as "Draft II")in 2022 further strengthens the protection of creditors.However,both the current "Company Law" and the "Draft II" have some problems,such as the fact that share repurchase still adopts the regulatory method of giving detailed reasons,lacking provisions on the financial constraints of repurchase,and still not making clear provisions on treasury shares.In 2022,although the "Draft II" added the subject of responsibility for illegal distribution by companies and strengthened the protection of creditors under company distribution,there is still no clear provision for the protection channels of creditors in share repurchase,making the interests of creditors face an imbalance situation in different distribution behaviors of companies with homogeneous economic effects.Making company distribution decisions is the right of company managers.Whether the current corporate governance in China is centered on the shareholders’ meeting or the board of directors,it is necessary to clarify the legal responsibilities of the distribution decision makers.The current legislative path for corporate distribution includes traditional balance sheet testing and solvency testing.Traditional balance sheet testing has the drawbacks of being rigid and inefficient,and cannot bear the burden of creditor protection.The solvency test has adapted to the evolution of capital regulations,and unified standards have constrained the distribution behavior of companies,making the distribution behavior of companies more widely applicable and broadening the space for the regulation of company distribution systems.This article proposes to adopt a corporate financial allocation regulation that reflects the unity of business judgment,with the board of directors with the power to manage the company as the main body of business judgment,responsible for company decision-making,and with directors assuming corresponding fiduciary obligations.Not only does it adapt to the evolving path of capital regulation,but it also further reflects the position and role of board centrism in the context of corporate distribution.From the perspective of taking the board of directors as the core,illegal corporate distribution behaviors are included in the accountability system,thereby forming a complete system of share repurchase system with corporate distribution constraints.