Is Interest on Securities to be Repurchased in Excess of 24% Annual Interest Rate Valid? – Ma v Yang Securities Repurchase Contract Case

(By Bai Lituan)Securities repurchase is a financial activity of raising funds by selling securities and meanwhile signing an agreement with the buyer to repurchase the same securities at the agreed price and time. There are not many securities repurchase cases because it is not long ago that people in our country began to raise funds in this way. The first case decided by the Shanghai Finance Court is Oriental Securities v Honggao Zhongtai Securities Repurchase case.

Securities repurchase contract related laws mainly include the Securities Law, the Company Law, the minutes of meetings of the Supreme People’s Court on securities repurchase cases and the Notice on Restating Several Issues Connected with Further Standardizing Securities Repurchase Activities published by the Central Bank, the Ministry of Finance and the China Securities Regulatory Commission. All securities repurchase cases courts are dealing with come from the main, small and medium sized business and startup boards. My search result shows no securities repurchase cases relating to the new OTC board (the national share transfer system for small and medium sized businesses).


Does Wind’s Sale of Tonghuashun’s Stock Constitute Insider Trading?


Previously, we posted “Tonghuashun VS. Wind and the Judgment Standards for Software Copyright Infringement in China” to introduce the copyright dispute between Wind and Tonghuashun. According to a recent report, two lawyers based in Beijing filed a complaint to the China Security Regulatory Commission (“CSRC”) accusing Wind and its affiliated company of insider trading, which has made the dispute more complicated.

As shown by the currently available information, from the second quarter of 2011 to the third quarter of 2012, Wind’s affiliated company was a shareholder of Tonghuashun. When the rumor emerged that Wind would sue Tonghuashun, Tonghuashun’s shares experienced several major trades. As indicated in the report issued in the third quarter of 2012, Wind sold all the Tonghuashun shares it had held. Wind explained this situation by stating that its investment in Tonghuanshun was to use its rights as a shareholder to persuade Tonghuashun to cease infringement. Today’s post will provide analysis on this issue.