5.3.3.2.2 Status of the repurchased shares

In the RMBCA, the shares repurchased by the corporation from the dissenters will have the status of authorized and unissued shares of the surviving or resulting corporation. In China, the authorized capital system has not been adopted; a different approach must therefore be taken to how the repurchased shares are to be dealt with. The company should not be allowed to hold its repurchased shares unlimitedly because this does not only go against the principle of capital maintenance but could also potentially prejudice the interests of creditors. Unfortunately, the status of the repurchased shares is not dealt with in Article 75.

For the time being, I think, the rules for public companies can be referred to. Under Article 143 of the Company Law, after a public company has purchased its own shares on the ground of shareholders' objection to proposals of mergers or divisions, the company must transfer the shares or write them off within 6 months. But in the long run, relevant rules for dealing with the repurchased shares should be explicitly prescribed in Article 75.