Rule for Preferred Stock in China: Overthrow of the Principle of "Equal Shares, Equal Rights"?
——From a Comparative Perspective
The principle of “equal shares, equal rights” was established by the Company Law of 1993 of the People’s Republic of China. At the initial stage only issuance of common stocks was allowed and the issuance of preferred stocks was interpreted as prohibited. The Company Law of 2006 has changed the rigidity of provisions of the Company Law of 1993 and laid down the legal foundation for issuance of preferred stock. The Rule for Administration of the Pilot Project for Preferred Stocks released on March 21, 2014 by the China Securities Regulatory Commission started the issuance of the preferred stocks in the Chinese capital market. The establishment of the legal system for issuance of preferred stock in China is not the symbol of overthrowing the principle of “equal shares, equal rights,” but the expansion and development of the principle of “equal shares, equal rights” in a new era.