A Study On Legal System Of Non-deposit-taking Lenders

Since the reform and opening up, private capital are increasingly rich but not orderly flow in China, the strong financial needs are constrained seriously by the traditional financial system, surging undercurrent private finance are still struggling in the mud, its potential significant risks are already on the verge of the brink of collapse. China’s financial supervision is let alone or tightens up, private lending where to go, these problems become the urgent important issue in the field of legal theory and practice circles. We need the scientific and rational legal system to achieve the modest relaxation of financial control and the gradual weakening of administrative intervention; we further give the real lending freedom to the civil and commercial players, recognize and cultivate a plurality of non-deposit-taking lenders, seek the solutions actively to the supervision dilemma in the financial development.This thesis takes the legal system of non-deposit-taking lenders as the study subject, through analyzing the basic theories and specific systems to enrich the empty legal field and enhance the level of legislation, law enforcement and judicial, promote lenders towards diversification and hierarchical, structure inclusive financial system which adapt to the condition of our country, then meet the growing variety of financial needs, and ultimately realize national economy comprehensive, coordinated and sustainable development.Non-deposit-taking lenders are the profit-winning organization or individual of engaged in the lending business that don’t absorb public deposits but borrow its own funds or borrowed funds to public. The lenders system is including financial institutions lenders, non-financial institutions lenders and unincorporated lenders. The legal system of non-deposit-taking lenders adjusts the social relations which occurred in the course of establishment, organization, activities and termination. The law is an important part of commercial law; it has a blend of public law and private law, a compound of organic law and practices law, a comprehensive of substantive law and procedural law, multi-level of legal norms, it also has nationality and international. We can understand its theoretical basis from the double correction under market and government failure theory, induced institutional change under the cost-benefit theory and endogenous constraints under law and finance theory. Its establishment and improvement has an irreplaceable and important role to confirm and protect the lenders’rights, guideline and regulatory commercial behavior mode, empower and control of regulatory authority. The systems of all countries have the same points and also some different in the lending body, lending license, lending interest rates, lenders supervision, lenders withdrawal, and etc. The legal system of our country has a long history, has experienced germination stage, development stage, maturity stage, low tide stage, up to now, there are still some shortcomings such as imperfect system, too high access threshold, too weak pertinence of target, lack of market withdrawal system. At present, in order to echo the practical needs of economic development, we should reduce the access threshold of lenders; implement different regulation in allusion to different level lenders, at the same time to establish the scientific and reasonable withdrawal mechanism, ultimately build up non-deposit-taking lenders system basing on the condition of our country.The legal construction of non-deposit-taking lenders should take the financial freedom as the premise, take the ensuring of financial security as the basis, and take the improving of financial efficiency as the focus. Financial harmony values should adhere to financial equity-oriented. The construction should follow the principle of financial rights equality, party autonomy principle of lenders and borrowers, the principle of profit recognition and protection, financial risk management principles and the principles of mandatory protection. According to the needs and characteristics of central and local lenders protection, we should adopt combined way of centralized and decentralized legislation, enact special and unified Lenders Basic Law as the core, and enact other related laws and regulations as assistant. The legal system of non-deposit-taking lenders consists of market access legal system, operation regulation legal system and market withdrawal legal system.Our legislation should adopt the principle of mixture doctrine which criterion doctrine is the based doctrine and administrative license doctrine is the auxiliary, the market access legal system consists of the general market access legal system, special market access legal system and foreign-related market access legal system. Firstly, we should convert supervision idea, enact "Commercial Registration Law" and disclose information to eliminate discrimination of ownership and promote the registration efficiency. Secondly, the CBRC and its dispatched institutions should become the regulatory authorities of the financial institutions lenders, the local finance offices are the regulatory authorities of non-financial institutions and unincorporated lenders, we also should improve special market access system from agency access, personnel access and business access. Furthermore, we should improve legislative style of foreign-related market access, convert restrictive access control to prudential supervision, then accelerate the adjustment and optimization of specific access systems.We also should change operation regulation idea from single administrative regulation to the linkage of market-oriented regulation, from the conservative and prudential supervision to limited and non-prudential regulation supervision, the aim of those changes is to achieve the organic integration of business compliance regulation and risk-oriented supervision. Secondly, we should take difference and hierarchical regulatory mode to achieve supervision level of centralization and decentralization, to discriminate the object of supervision and the severe or light supervision, and build up "Five-in-One" and three-dimensional pattern lender supervision which include central-lead supervision, local co-regulation supervision, institutions supervision, community independent regulatory and industry self-regulation. Lastly, we should change the traditional concept that thinks highly of external control but light internal control, improve the internal governance structure, and strengthen the internal control system. The improvement of external supervision should be take measures from capital constraints, interest rates control and information disclosure.The market withdrawal of lenders can be divided into active and passive withdrawal, mainly include three kinds of ways of dissolution, withdrawal and bankruptcy. The withdrawal of financial institutions should adopt the dual-led model of combination of administration and court, the withdrawal of non-financial institutions lenders and unincorporated lenders should adopt court dominant mode. We should enact that "corporate bankruptcy law" is the basic law for withdrawal of lenders in the Lenders Basic Law; in the meantime, we should enact the special laws of bankruptcy and personal bankruptcy. Therefore, the legal systems of market withdrawal take corporate bankruptcy law as core and take the law of bankruptcy and personal bankruptcy as two wings, the improvement of specific system should be commence from the four aspects which include risk early warning, risk relief, bankruptcy procedures, and accountability.