Viewpoint... The process of repurchasing shares of listed companies to reduce registered capital.
Published:
2022-09-20
Share repurchase is the act of a company buying back the shares of the Company issued or outstanding in accordance with certain procedures. The purpose of share repurchase is mostly the following: to reduce the registered capital of the company, to use the shares for employee stock ownership plan or equity incentive, to use the shares for the conversion of corporate bonds issued by listed companies that can be converted into shares, and to maintain the value of the company and shareholders' rights and interests. This article will summarize the operation process when share repurchase is used to reduce registered capital for your reference. 1. related regulations The main laws and regulations related to the repurchase of shares by listed companies include: the People's Republic of China Company Law, Share Repurchase Rules for Listed Companies, Shanghai Stock Exchange Self-Regulatory Guidelines No. 7-Repurchase of Shares and Shenzhen Stock Exchange Self-Regulatory Guidelines No. 9-Repurchase of Shares. 1. Company Law of the People's Republic of China Article 142 A company may not purchase its own shares. However, any of the following circumstances shall be excluded: (I) reduction of the company's registered capital; (II) merger with other companies holding shares in the Company; (III) use of shares for employee stock ownership plans or equity incentives; (IV) shareholders request the company to purchase its shares due to their objections to the merger or division resolution made by the general meeting of shareholders; (V) the use of shares for the conversion of convertible corporate bonds issued by listed companies; (VI) listed companies is necessary to safeguard the value of the company and shareholders' rights and interests. 2. Rules on Share Repurchase of Listed Companies Article 2: The term "repurchase of shares by a listed company" as mentioned in these Rules refers to the act of a listed company purchasing its own shares in one of the following circumstances: (I) reduction of the company's registered capital; (II) use of shares for employee stock ownership plans or equity incentives; (III) the use of shares for the conversion of convertible corporate bonds issued by listed companies; The (IV) is necessary to safeguard the value of the company and the rights and interests of shareholders. The circumstances referred to in Item (IV) of the preceding paragraph shall meet one of the following conditions: The closing price of the (I) company's stock is lower than the net asset value per share in the most recent period; The cumulative decline in the closing price of the company's stock in the (II) 20 consecutive trading days reached 30%; (III) other conditions prescribed by the CSRC. 3. Guidelines on Self-Regulation of Listed Companies on the Shanghai Stock Exchange No. 7-Repurchase of Shares "Guidelines on Self-Regulation of Listed Companies on the Shenzhen Stock Exchange No. 9-Repurchase of Shares" Article 2: These Guidelines shall apply to the repurchase of the Company's shares (hereinafter referred to as the repurchase of shares) due to the following circumstances: (I) reduction of the company's registered capital; (II) use of shares for employee stock ownership plans or equity incentives; (III) the use of shares for the conversion of convertible corporate bonds issued by listed companies; The (IV) is necessary to safeguard the value of the company and the rights and interests of shareholders. The circumstances referred to in Item (IV) of the preceding paragraph shall meet one of the following conditions: The closing price of the (I) company's stock is lower than the net asset value per share in the most recent period; The closing price of the company's stock has fallen by a cumulative 30% over the (II) 20 consecutive trading days; (III) other conditions prescribed by the CSRC. In addition to the above-mentioned circumstances, the repurchase of shares by a listed company shall be handled in accordance with the Company Law, the Securities Law, the China Securities Regulatory Commission and the relevant provisions of the Exchange. 2. repurchase process In this paper, the implementation of share repurchase to reduce the company's registered capital as an example, to sort out the listed company's share repurchase flow chart and the corresponding stage of information disclosure obligations: 3. considerations 1. Review procedures before share repurchase: If it is used to reduce the registered capital, it is mandatory to perform the review procedures of the general meeting of shareholders, and it must be approved by more than 2/3 of the voting rights held by the shareholders present at the meeting. 2. Information disclosure obligations: Listed companies shall fulfill their information disclosure obligations and notify creditors in a timely manner in strict accordance with the Company Law, the Rules on Share Repurchase of Listed Companies and the repurchase supervision guidelines issued by the Shanghai Stock Exchange and the Shenzhen Stock Exchange. 3. Opening of accounts related to share repurchase:(1) bank fund account (opened by bank);(2) special account for repurchase (opened by Zhongdeng);(3) stock trading account (opened by brokerage firm).
Share repurchase is the act of a company buying back the shares of the Company issued or outstanding in accordance with certain procedures. The purpose of share repurchase is mostly the following: to reduce the registered capital of the company, to use the shares for employee stock ownership plan or equity incentive, to use the shares for the conversion of corporate bonds issued by listed companies that can be converted into shares, and to maintain the value of the company and shareholders' rights and interests. This article will summarize the operation process when share repurchase is used to reduce registered capital for your reference.
1. related regulations
The main laws and regulations related to the repurchase of shares by listed companies include: the People's Republic of China Company Law, Share Repurchase Rules for Listed Companies, Shanghai Stock Exchange Self-Regulatory Guidelines No. 7-Repurchase of Shares and Shenzhen Stock Exchange Self-Regulatory Guidelines No. 9-Repurchase of Shares.
1. Company Law of the People's Republic of China
Article 142 A company may not purchase its own shares. However, any of the following circumstances shall be excluded:
(I) reduction of the company's registered capital;
(II) merger with other companies holding shares in the Company;
(III) use of shares for employee stock ownership plans or equity incentives;
(IV) shareholders request the company to purchase its shares due to their objections to the merger or division resolution made by the general meeting of shareholders;
(V) the use of shares for the conversion of convertible corporate bonds issued by listed companies;
(VI) listed companies is necessary to safeguard the value of the company and shareholders' rights and interests.
2. Rules on Share Repurchase of Listed Companies
Article 2: The term "repurchase of shares by a listed company" as mentioned in these Rules refers to the act of a listed company purchasing its own shares in one of the following circumstances:
(I) reduction of the company's registered capital;
(II) use of shares for employee stock ownership plans or equity incentives;
(III) the use of shares for the conversion of convertible corporate bonds issued by listed companies;
The (IV) is necessary to safeguard the value of the company and the rights and interests of shareholders.
The circumstances referred to in Item (IV) of the preceding paragraph shall meet one of the following conditions:
The closing price of the (I) company's stock is lower than the net asset value per share in the most recent period;
The cumulative decline in the closing price of the company's stock in the (II) 20 consecutive trading days reached 30%;
(III) other conditions prescribed by the CSRC.
3. Guidelines on Self-Regulation of Listed Companies on the Shanghai Stock Exchange No. 7-Repurchase of Shares "Guidelines on Self-Regulation of Listed Companies on the Shenzhen Stock Exchange No. 9-Repurchase of Shares"
Article 2: These Guidelines shall apply to the repurchase of the Company's shares (hereinafter referred to as the repurchase of shares) due to the following circumstances:
(I) reduction of the company's registered capital;
(II) use of shares for employee stock ownership plans or equity incentives;
(III) the use of shares for the conversion of convertible corporate bonds issued by listed companies;
The (IV) is necessary to safeguard the value of the company and the rights and interests of shareholders.
The circumstances referred to in Item (IV) of the preceding paragraph shall meet one of the following conditions:
The closing price of the (I) company's stock is lower than the net asset value per share in the most recent period;
The closing price of the company's stock has fallen by a cumulative 30% over the (II) 20 consecutive trading days;
(III) other conditions prescribed by the CSRC.
In addition to the above-mentioned circumstances, the repurchase of shares by a listed company shall be handled in accordance with the Company Law, the Securities Law, the China Securities Regulatory Commission and the relevant provisions of the Exchange.
2. repurchase process
In this paper, the implementation of share repurchase to reduce the company's registered capital as an example, to sort out the listed company's share repurchase flow chart and the corresponding stage of information disclosure obligations:
3. considerations
1. Review procedures before share repurchase: If it is used to reduce the registered capital, it is mandatory to perform the review procedures of the general meeting of shareholders, and it must be approved by more than 2/3 of the voting rights held by the shareholders present at the meeting.
2. Information disclosure obligations: Listed companies shall fulfill their information disclosure obligations and notify creditors in a timely manner in strict accordance with the Company Law, the Rules on Share Repurchase of Listed Companies and the repurchase supervision guidelines issued by the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
3. Opening of accounts related to share repurchase:(1) bank fund account (opened by bank);(2) special account for repurchase (opened by Zhongdeng);(3) stock trading account (opened by brokerage firm).
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