What is going on with the company s repurchase of equity, and how to deal with the company s repurch

Under the Company Law, a limited liability company is not allowed to repurchase the company's equity, and only under special circumstances can a shareholder request the company to repurchase the shareholder's equity. For example, if a company merges, divides, or transfers its main property, the company does not distribute profits to shareholders for five consecutive years, but makes profits for five consecutive years. Shares are also not allowed to acquire the company's shares, but there are several exceptions such as reducing the registered capital and dissenting shareholders repurchase, that is, prohibiting in principle and allowing exceptions.

For a limited liability company, shareholders who are dissatisfied with the resolution of the shareholders' meeting may request the company to repurchase the shareholders' equity under three circumstances: (1) the company has not distributed profits to shareholders for five consecutive years, and the company has made profits for five consecutive years and meets the conditions for distributing profits stipulated in this Law, (2) the company merges, divides or transfers its main property, and (3) the business period specified in the articles of association of the company expires or other reasons for dissolution as stipulated in the articles of association arise, and the shareholders' meeting passes a resolution to amend the articles of association so as to continue the company. For shares, there are four situations in which shareholder equity can be repurchased:

1) Reducing the registered capital of the company, (2) merging with other companies holding shares of the company, (3) awarding shares to employees of the company, and (4) shareholders requesting the company to acquire their shares due to objections to the resolution of merger and division made by the general meeting of shareholders. Legal basis: Article 74 of the Company Law of the People's Republic of China has any of the following circumstances, shareholders who vote against the resolution of the shareholders' meeting may request the company to acquire their equity in accordance with a reasonable **:

1) The company has not distributed profits to shareholders for five consecutive years, and the company has made profits for five consecutive years and meets the conditions for profit distribution stipulated in this Law; (2) The merger, division or transfer of the main property of the company; (3) The business period specified in the articles of association of the company expires or other reasons for dissolution as stipulated in the articles of association arise, and the shareholders' meeting passes a resolution to amend the articles of association to make the company exist. If the shareholder and the company cannot reach an equity acquisition agreement within 60 days from the date of the resolution of the shareholders' meeting, the shareholder may file a lawsuit with the people's court within 90 days from the date of the resolution of the shareholders' meeting.

The so-called share repurchase refers to the use of accumulated funds (i.e., own funds) or debt financing after the surplus income of the listed company to repurchase back the company's own issued ordinary shares with a certain amount of **, and use them as treasury stocks or cancel them to achieve the purpose of reducing capital or adjusting the share capital structure. Share repurchase and spin-off, division belong to the category of capital contraction, it is a common capital operation mode and corporate financial behavior in foreign mature markets.

The motivation for share buybacks is that the company is trying to circumvent the management of cash dividends, or to adjust the company's capital structure in response to hostile takeovers by other companies. As a legal corporate action, share repurchase is a form of corporate restructuring with a change in the ownership and control structure of a company, just like a leveraged buyout. After the completion of the share repurchase, the company can cancel the repurchased shares.

But in the vast majority of cases, companies will repurchase shares as follows:"Treasury shares"Retained, treasury shares are still outstanding**, but do not participate in the calculation and distribution of earnings per share. Treasury shares can be used for other purposes in the future, such as implementing an employee option plan, issuing convertible corporate bonds, etc., or when funding is needed.

Whether it is a company repurchase or equity transfer, if it is an equity transfer between shareholders, there is no need for a resolution of the shareholders' meeting, and if it is a transfer from a shareholder to a person other than a shareholder, it is necessary to obtain the opinions of other shareholders; If it is a company buyback, the company will reduce its capital, which requires a resolution of the shareholders' meeting.

Legal analysis: After the repurchase of shares, treasury shares are generally formed. The company often recovers the company that has been issued and has not been cancelled. Treasury shares are the right to have no voting rights, receive cash dividends, or distribute the company's remaining assets in the event of liquidation.

Legal basis: Article 143 of the Company Law of the People's Republic of China If the registered ** is stolen, lost or destroyed, the shareholder may request the people's court to declare the ** invalid in accordance with the publicity and reminder procedures stipulated in the Civil Procedure Law of the People's Republic of China. After the people's court declares the ** invalid, the shareholders may apply to the company for supplementary information**.

Buyback, also known as compensation**, refers to the fact that one party to a transaction promises to purchase a certain amount of products produced by the machinery or technology while exporting machinery and equipment or technology to the other party.

This practice is the basis for product buyback. In some cases, the parties may also agree that the exporter of the machinery or equipment will purchase other products supplied by the importing party. The repurchase method is relatively simple, and it is conducive to the cost accounting of enterprises, and is widely used.

1. What is a repurchase.

Repurchase refers to the act of a listed company using cash and other means to buy back a certain amount of the company's outstanding issuance from the market. After the completion of the repurchase, the company can cancel the repurchase. However, in the vast majority of cases, the company retains the repurchased ** as treasury shares, which are still outstanding**, but do not participate in the calculation and distribution of earnings per share.

Treasury shares can be used for other purposes at a later date, such as the issuance of convertible bonds, employee benefit plans, etc., or when funding is needed**.

Regarding the issue of repurchase, it has been a long time in the foreign market, and with the development of China's market, the number of repurchase cases is increasing. The more successful cases include: Xingpai Xun's merger of Dayuyuan into Xiaoyuyuan in 1992, and Lujiazui's repurchase of state shares in 1994.

Yuntianhua and chlor-alkali B have also reported the news of the repurchase, which has attracted great attention from all parties in the market, and at the same time, the repurchase concept stocks have been hyped up.

2. What is the motivation for the repurchase.

If we look at the world economy, it is not difficult for us to find that in different historical periods, as well as between different countries and even listed companies of different natures, the motives for repurchase are not exactly the same. Generally speaking, there are the following five aspects: (1) Prevention of mergers and acquisitions.

Taking the United States as an example, after entering the 80s, especially since 1984, due to the prevalence of hostile mergers and acquisitions, many listed companies have entered the market in a big way and repurchased the company to maintain control; (2) Revitalization**. On October 19, 1987, the New York market was in turmoil. Since then, the main motive for the repurchase of the company by a listed company in the United States is to stabilize and improve the company and prevent the business crisis caused by the stock price; (3) Reduce operating pressure.

Maintain or increase the level of earnings per share (i.e., give shareholders a relatively high return) and the company to reduce operating pressure; (4) Recapitalization. That is, large-scale borrowing for repurchases** or special dividends, thereby rapidly and significantly increasing the proportion of long-term debt and financial leverage, and optimizing the capital structure. Recapitalization tends to occur in companies with a fairly strong competitive position, whose operations have entered a stage of stable growth before selling, but whose long-term debt ratio is too low; (5) Other considerations.

Does the company have the right to buy back the equity of its own company?

In three cases, shareholders who are dissatisfied with the resolution of the shareholders' meeting can request the company to repurchase the shareholders' equity:

1. The company does not distribute profits to shareholders for five consecutive years, and the company has made profits for five consecutive years and meets the conditions for distributing profits stipulated in this law.

2. The merger, division or transfer of the main property of the company.

3. The expiration of the high limit of the business period specified in the articles of association of the company or other reasons for dissolution stipulated in the articles of association occur, and the shareholders' meeting passes a resolution to amend the articles of association to make the company exist.

1. How to give up the company's equity.

1.It is sufficient to declare that the right of first refusal is waived, and a lawyer can be entrusted. Shareholders give up their shares and indicate that they will withdraw their shares, and there are as follows:

Withdrawal of shares by way of equity transfer:

1) Transfer of equity between shareholders;

2) Transfer of equity by a person other than a shareholder;

3) The provisions of the company's articles of association on the transfer of shares.

2.Statutory circumstances for applying for withdrawal of shares.

1) The company has not distributed profits to shareholders for five consecutive years, but the company has made profits for five consecutive years and meets the conditions for profit distribution stipulated in this Law, (2) the company merges, divides or transfers its main property (3) the business period specified in the articles of association of the company expires or other reasons for dissolution as stipulated in the articles of association appear, and the shareholders' meeting passes a resolution to amend the articles of association to make the company exist.

3.According to the analysis of the provisions of the Company Law, the dissolution of the company is equivalent to the legal effect of the withdrawal of shareholders from the company under the circumstances of the dissolution of the company.

2. How many ways are there for shareholders to withdraw?

Shareholders can exit in the following ways:

1.Equity transfer, shareholders of a limited liability company can withdraw from the company through equity transfer;

2.The company has not distributed profits to shareholders for five consecutive years, and the company has made profits for five consecutive years and meets the conditions for profit distribution stipulated in this Law;

3.Merger, division, or transfer of major assets of the company;

4.Upon the expiration of the business period specified in the articles of association or the occurrence of other reasons for dissolution as stipulated in the articles of association, the shareholders' meeting passes a resolution to amend the articles of association to make the company exist;

5.Dissolution of the company.

Article 74 of the Company Law of the People's Republic of China stipulates that in any of the following circumstances, a shareholder who votes against the resolution of the shareholders' meeting may request the company to acquire its equity in accordance with a reasonable **:

1) The company has not distributed profits to shareholders for five consecutive years, and the company has made profits for five consecutive years and meets the conditions for profit distribution stipulated in this Law;

(2) The merger, division or transfer of the main property of the company;

(3) The business period specified in the articles of association of the company expires or other reasons for dissolution as stipulated in the articles of association arise, and the shareholders' meeting passes a resolution to amend the articles of association to make the company exist.

Shares**** The circumstances under which the company's equity can be repurchased are reduced by the company's registered capital; merger with other companies holding shares in the Company; Use the shares for employee stock ownership plans or equity incentives; Shareholders objected to the resolution of the general meeting of shareholders to merge and divide the company, and requested the company to acquire its shares; The shares are used to convert the corporate bonds issued by the listed company that can be converted into **; It is necessary for a listed company to maintain the value of the company and the rights and interests of shareholders. Article 142 of the Company Law of the People's Republic of China shall not acquire the shares of the Company. However, this does not apply in any of the following circumstances:

1) Reduce the registered capital of the company; (2) Merger with other companies in which Yunna holds shares of the Company; (3) Using shares for employee stock ownership plans or equity incentives; (4) Shareholders request the company to acquire their shares because they disagree with the resolution of the general meeting of shareholders to merge or divide the company; (5) The shares are used to convert the corporate bonds issued by the listed company that can be converted into **; (6) It is necessary for the listed company to maintain the company's value and shareholders' rights and interests.