The Draft Amendment To The Securities Law Came To Light.

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The revised draft has been revised and is expected to be submitted to the Standing Committee of the National People's Congress for consideration in April this year.

Fu Yingru, spokesman for the five session of the twelve National People's Congress, said.

Wu Xiaoling, vice chairman of the finance and Economic Commission of the NPC, said in an interview that foreign AB shares could be studied to protect the founder's control.

What will be the highlights of the second trial of the 17 year old securities law? "Expect more substantive breakthroughs!" Pan Gang, chairman of the CPPCC National Committee and chairman of the Yili Group and President of the Yili Group, responded in such a concise manner.

Two ways to prevent and control risks are imperative.

During this time, much of Pan Gang's energy was devoted to studying this year's government work report.

"Deepening the reform of multi-level capital market and improving the basic system of the motherboard market".

This sentence leaves us much room for imagination.

He understands that the two reading of the draft amendment to the Securities Law means that it will play a top-level role in the development of the medium and long term capital market in the future.

In the eighteen thousand word report, he found another discovery: the "real economy" appeared 7 times, the "virtual economy" appeared 0 times, and the word "finance" appeared 18 times, 7 of which appeared to be related to "risk" and "security". 3 times were related to "system reform", "regulatory system reform", "rectification and standardization", and 2 times emphasized the "more flow" and "enhanced service" real economy.

In the face of this group of figures, his interpretation is "rich information with policy oriented guidance".

Without mentioning the concept of "virtual economy", it does not mean avoiding it.

"For him, as a part of the reform plan of the capital market, the two draft of the draft Securities Law" should also strictly abide by the spirit of the government's report on the prevention and control of financial risks, and avoid the need for the "virtual economy" to be gradually guided into the "running in period" of the benign interaction of coordinated development.

"In the case of system mismatch, the phenomenon of capital turnover, loan broker and excessive leverage will inevitably aggravate the vulnerability of the financial system and increase the potential risks of the whole economic system.

"Geng Qiang, executive director of the Nanjing University's economic growth research center, said there was a serious consequence: the contraction of the real economy, the confidence and enthusiasm of innovation and entrepreneurship.

These risks have also been identified by the relevant senior authorities.

At the 2017 securities and futures supervision meeting of the securities and Futures Commission, Liu Shiyu, chairman of the securities and Futures Commission, also said that the draft amendment to the securities law, which is about to "read two", should sum up the experiences and lessons accumulated in the capital market for many years, remove some of the backward things and supplement the urgent needs.

It is not just the securities law that needs to be changed.

Gui Minjie, chairman of the former Shanghai Stock Exchange, believes that with the pformation and upgrading of China's economy and the innovation of company's organizational form, the current system and provisions of the company law can no longer fully meet the needs of market players and market development.

"It should be said that mergers and acquisitions have positive aspects for enterprises to re integrate resources and enhance enterprise value, but if the acquirers do not respect the corporate culture, they can not form a positive interaction with the acquirers, and they may also cause damage to the enterprises.

"Wu Xiaoling, deputy director of the finance and Economic Commission of the National People's Congress, pointed out that through" Bao Wan incident ", we can see from the system that we should study how to effectively protect the control rights of the founders and excellent teams of enterprises, and enable enterprises to operate in accordance with the long-term management policy, rather than focusing on short-term stock price fluctuations.

Her suggestion is to explore the establishment of the AB share system, or to allow the establishment of anti takeover provisions in the articles of association, which may be a way.

AB equity: Double-edged Sword

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At the institutional level, one of the foothold for supporting the development of the real economy is to push ahead.

Reform, improve the company law, securities law and other laws and regulations, and introduce more equitable capital market rules to prevent the impact of capital on industry under unfair and unfair rules.

"When answering a reporter's question, Pan Gang used the word" fair "many times.

According to relevant information, in western countries with relatively perfect capital market development, in general, there are leveraged buy-out schemes, such as the "poison pill plan" of various kinds of counter leveraged buyouts, and the two-tier or multi-layer shareholding structure system with different rights of the same stock.

In the view of Zhang Weihua, a cross-border M & a professional, coping with hostile takeovers is a daily important job of the board of directors of those listed companies that are dispersed and rewarded well, which has become a convention in a mature commercial society.

However, under the restriction of the relevant provisions such as the company law and the securities law, the high-quality listed companies that have been closely watched by barbarians are unable to implement the "poison pill plan" which is in line with the West in the risk superposition of the "guarded guard war", nor can they use "AB".

"Way to fight.

No doubt, this is also one of the reasons why Wang Shi and Dong Mingzhu of A shares "fry pan" once worried or even angry.

By contrast, the "rising stars" who go to the US IPO are much more fortunate.

According to the data provided by law firm Ropes&Gray, since January 2013, only one of the Chinese companies listed in the US has not adopted this shareholding structure. Jingdong, Sina micro-blog, 58 city and so on all have their "AB two-tier equity" as their wish.

The choice of Listed Companies in the United States is more diversified: Google adopts a typical two-tier ownership structure of A and B, and Facebook adopts the "dual system + voting proxy" to ensure Zuckerberg's absolute control, while in Zynga, CEO Mark Ping uses a three tier structure.

A news from the end of August 2016 showed that the Singapore Stock Exchange, which had said "no" to the two-tier shareholding structure, has completed its turn, announcing that it has allowed enterprises to pave the way for the listing of similar stocks in order to attract more initial public offering (IPO) pactions.

Immediately after that, Ou Dali, chief executive of the Hongkong Securities Regulatory Commission, which once rejected the proposal of "two-tier equity" in 2015, has begun to change its tone. It is not impossible for the Hongkong stock market to accept some form of different voting rights structure.

In January of this year, Li Xiaojia, chief executive officer of Hongkong exchange, revealed that the proposed third board market in Hongkong could consider accepting a two-tier shareholding structure.

Such a cautious breakthrough is closely related to the controversy over whether the equity structure of a two-tier company is fair.

According to relevant information, under the two-tier equity system, the class A shares issued to external investors are only 1 votes per share, while the B class shares in the management class can vote several times or even tens of times. They share the same dividend and the right to distribute the sale.

Class B shares are not publicly traded, but they can be converted into class A shares according to the proportion of 1:1.

Analysts believe that such a shareholding structure can ensure that managers focus on business development, do not have to worry about hostile takeovers or be washed out; on the other hand, if there is no lack of a complete and complete regulatory system, it will easily damage the interests of other shareholders.

It is reported that in the United States, companies adopting different voting frameworks are faced with stricter reporting and disclosure rules, and shareholders can also hold together to initiate class action lawsuits.

"The practice of offshore capital markets shows that the two-tier shareholding structure has played a positive role, and both sides have legitimate demand for it. China's capital market should face up to it.

"Dr. Chen Ruoying, associate professor of Law School of Peking University, pointed out in his own research report that to introduce this structure into China, we need two new systems: the company must publicly explain the necessity of adopting the structure and safeguard the interests and interests of the public investors; establish arbitration dispute resolution mechanism, give full play to the information and resource advantages of professionals, effectively relieve the public investors and deter the actual controllers.

Pan Gang said in this regard, "at the critical juncture of revitalizing the real economy, I think what most entrepreneurs want most is how to push forward the company's strategic development and ensure normal operation.

"For him," we look forward to the strict supervision mechanism that is matched with the two-tier equity system. This is also an important driving force to help the board and management to continuously enhance the value of the company. At the same time, it can better protect the legitimate rights and interests of the minority shareholders and long-term interests.

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Comprehensive information shows that the topic of "two-tier shareholding structure" has shown a hint of "thaw" in May 2014: Song Liping, general manager of the Shenzhen Stock Exchange and vice president of the association of listed companies, said in a speech at the meeting that in view of the revision of the company law and securities law, we should consider reserving some space for the two-tier shareholding structure.

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In March 2015, an expert on economic law and Professor Feng Guo, Dean of the Law School of Wuhan University, pointed out that in the mixed reform of state-owned enterprises, the two-tier equity structure mode can keep the state under the control of the enterprises in the special field while realizing the fading of state capital.

But he also stressed that in view of the risks that may be brought about by improper use, we need to combine the particularity of state-owned enterprises and the status of state shareholders. "We must make a necessary restriction on the structure of two-tier shareholdings, and apply them in the premise of reducing the risk to the minimum through the perfection of the supporting system and the applicable object and scope of application.

According to relevant information, in 2005, only 1% of IPO in the US adopted a two-tier shareholding structure. By 2015, the proportion had risen to about 15%. In 2015, more than half of the new listed companies with two-tier shareholding structure were technology enterprises.

Domestic stakeholders believe that such a shareholding structure is only suitable for "light asset class technology companies".

But there are analysts who say, "less than 50% of non technology companies also choose this structure, so there is no particular limitation in their adaptability.

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A study of double tier equity companies in the US shows (Gompers, Ishii, andMetrick) that companies tend to focus on the media, business services, printing and publishing, retailing, and the "heavy asset" machinery industry.

For companies such as Vanke, GREE and so on, this research which is not widely concerned may be another good news.

"We agree to reserve the space for two-tier shareholding structure for enterprises, but we also earnestly hope that agriculture, food and other industries related to the national economy and people's livelihood can also be classified as pilot projects.

"Pan Gang's reason is that compared with the developed countries, China's agriculture is inherently weak, and there are many farmers and small and medium-sized enterprises in the industrial chain. In the face of the impact of hot money, even the leading enterprises are extremely thin."

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He suggested that, as a "visible hand" to maintain fair order in the market, the government could set up a "firewall" for the capital to enter the livelihood industry, for special examination and approval. On the other hand, when modifying the securities law and company law, it could also consider the AB double tier ownership structure with "limited power and unlimited capital" to help the weak party upgrade its "big sword and spear" into a "modern weapon".

The second instance of the draft amendment to the securities law is in sight. It is not yet known whether the "AB two-tier shareholding structure" can be included in it.

But we can know for sure that spring will gradually improve and perfect the rule of law system in the capital market.

More interesting reports, please pay attention.

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