Phaita, author of the column of the documentary/new wave financial opinion leader (kopleader)

Is it possible to maintain the company’s equity value through a repurchase of shares, thus avoiding the emergence of a “one dollar” market? If so, the market for the promotion of an equity “one dollar unit” would become the “insolvency” of the A market. This is a problem that needs to be clarified because of the problems associated with the demolition system.

Since the adoption on 26 October of a change in the company’s equity buying provisions in the Companies Act, the market company’s shareholdings have tired. How to regulate the repurchase of shares by listed companies, and to this end, the three Departments of the Board, the Ministry of Finance and the National Commission have recently joined forces to issue the Opinion on Support for Repurchase of Companies (hereinafter referred to as “the Opinion”) to provide guidance on the repurchase of shares by listed companies.

Further support was given to the repurchase of shares of listed companies in the Opinion, following the loosening of the Companies Act. The most visible performance is two. The first is to treat shares back as cash and to provide for marketed companies to repurchase their shares on a cash basis, using a bidding method and pooling their bids, and to incorporate the relevant portion of the cash scores of the same company, depending on the cash score.

The second is to support marketed companies in raising funds for repurchasing their shares through the issuance of priority units, bonds etc. Marketed companies that support the implementation of equity repurchase are required to refinance in a simple and expeditious manner by law. Further, when marketed companies apply for refinancing after repurchasing their shares, the size of the financing does not exceed 10 times the total amount of repurchase in the last 12 months, this Board of Trustees for Refinancing issues resolution is not subject to the interval between the financing days prior to the date on which it takes place and gives priority support to such refinancing applications.

At the same time, the Opinion also identifies two cases in which corporate values and shareholders are repurchased, namely, that marketed companies are less than each of their net assets, or that 20 trading days have accumulated a 30 per cent reduction in equity prices.

In short, the Opinion is expected to further regulate the repurchase of shares of listed companies, while giving more support to the repurchase of shares of listed companies. The enthusiasm for the repurchase of marketed companies is positive.

However, perhaps the Opinion was too busy, and the Opinion itself was a good place. In penultimate, the Opinion itself also contains the need for “addressing”.

The first is the question of repurchase of shares as cash. I am in general supportive of this. However, not all repurchase of shares can be considered as cash in the same way, but only as repurchase of shares for write-off. Since only a share is written off, the interest of the investor in the shares will increase. On the contrary, if the repurchase share is used for employee holding plans or equity incentives, even as stock units, it does not result in an increase in the equity interests of investors, it is inappropriate for such a repurchase to be treated as a cash score. Thus, the Opinion provides that the expression “in which a listed company uses cash as a counterpart, a bidding method and a pool of competitive bidding for repurchase of shares is not accurate, and it is necessary to amend it to include the relevant portion of the cash score, depending on the cash score of the same company.

The second is that the Opinion identifies two cases in which corporate values and shareholders are repurchased, i.e., marketed companies are less than each of their net assets, or 20 trading days have accumulated a 30 per cent reduction in equity prices. It is my view that there is a need to add a case in this case, where “equity is broken”. This is also a share cost for public investors, since the offer is the price for market companies to sell stocks to social public investors. The collapse of this price has also directly undermined the shareholders’ interests of public investors. Therefore, “equity breaks” need to be included in the case of equity buying in favour of shareholders. In the case of sub-units (within two or three years of market time) when the equity price is broken, a repurchase of shares may be made on the basis of the need to safeguard the interests of shareholders.

In addition, it would be interesting to know whether the two cases in which the value of the company and the rights of shareholders were repurchased were appropriate for all companies. There was a need to strike a balance between market withdrawals of listed companies. For example, the promotion of shares was withdrawn from the market for 20 consecutive transactions of less than 1 yen. If this happens again, is the company concerned not to be able to maintain the company’s equity through a repurchase of shares, thus avoiding a “$1” retreat? If so, the market for the promotion of an equity “one dollar unit” would become the “insolvency” of the A market. This is a problem that needs to be clarified because of the problems associated with the demolition system.

(The author of the present paper introduced: Financial Commentator, 20 years of stock city exercises, a monopoly and opinion on the stock market, a book entitled Light-Favoured Stock. (b) The situation in the Democratic Republic of the Congo;