The Legal Regulation Of The Equity Pledge Repurchase Transaction Of Listed Companies

Equity,as a special right enjoyed by shareholders as a contribut ion to the company,has multiple rights and attributes such as proper ty rights and management rights.Because equity has the property of p roperty,it can become one of the targets for shareholders to provide guarantees to creditors.The exchange value of equity,or the liquid ity of equity,is most obvious in the field of listed companies.Not only that,stock exchanges that provide trading venues and ancillary services for the transfer of equity in listed companies,but also pro vide equity for listed companies.The transfer provides an open marke t and real-time transfer prices,which enhances the liquidity of the equity of listed companies.It is also because of the strong liquidit y of the listed company’s equity,that financial investors are willin g to accept the equity of the listed company held by shareholders as the subject of guarantee and provide them with corresponding financin g services.The listed company’s shareholders use their equity as the subject matter of guarantee for financing,which has the legitimacy of priva te law.However,at the current stage,China’s listed company shareho lders have a high proportion of their pledge of their equity,and man y listed company shareholders are involved in equity pledge transacti ons.Under the pressure of the macroeconomic downturn,listed companyshareholders have repeatedly experienced equity pledge breaches.The risk of liquidation,the large-scale,high proportion of listed comp any’s equity liquidation has become the sword of Damocles in China’s stock exchange market.In October 2018,the Shenzhen government annou nced the establishment of a special group to raise 15 billion yuan of "risk mutual aid" funds to help listed companies with equity pledges and liquidity pressures to mitigate risks.Subsequently,Beijing,Zh uhai,Zhejiang,Chengdu,Xiamen,and many others Provincial and munic ipal governments announced that they "rescued" local listed companies’ equity pledge risks.However,the government-sponsored financial as sistance can only alleviate the short-term risks of equity pledge and liquidation of listed companies,in order to alleviate the liquidity pressure caused by market risks to shareholders of listed companies and cannot essentially resolve the accumulated listing.The risk of t he company’s equity pledge cannot effectively prevent the risk of new equity pledge closing.This article selects the risk of liquidation of equity pledge of listed companies that threatens the order and sec urity of China’s stock exchange market at the current stage as the st arting point.Through historical methods,extraterritorial comparison methods,and empirical analysis methods,this paper analyzes the use of listed company equity as the security target The legal basis of s ecured transaction activities,so as to explore the risks of listed c ompanies’ equity guaranteed transactions and the shortcomings of exis ting rules,and propose corresponding system improvement suggestions for different risk causes in order to resolve the listed company’s eq uity guarantees through legal regulation Trading risks.Through the p ath of rule of law,the long-term management and control mechanism fo r the equity guarantee transaction risks of listed companies is reali zed.This article is based on this thinking and discusses the legal no rms for the risk reduction of equity guarantee transactions of listed companies.The thesis is divided into five chapters:The first chapter focuses on the equity pledged repo transaction activities of listed companies that are widely used in the current ca pital market.Through the background carding,analysis of transaction specificity,and analysis from the perspective of economics of trans action activities,the transaction is expected to be Provide legal ba sis for activity laws and regulations.The first chapter has three se ctions.The first section sorts out the background of the listed comp any’s equity pledge repurchase transaction,including the historical evolution of this transaction activity,and the corresponding economi c foundation and the evolution of laws and regulations during the his torical evolution.The article argues that the development of equity pledged repo transactions at this stage has historical reasons,econo mic foundations,and legal system support.From a historical perspect ive,after China’s reform was liberalized,with the progress of socia l and economic development,China has established a capital market.I n the simple era of the commodity economy,there has been an equity p ledge loan activity that uses equity as a security object.At that ti me,the pledge loan with a commercial bank as the sole financial lend er and equity interest as the object of guarantee was in line with th e transaction purpose of the traditional guarantee legal system;at t he same time,only the limited legal provisions in China’s Guarantee Law were enough to meet the needs of the legal regulation of equity p ledge loan activities at that time.With the gradual advancement of C hina’s economic system reform,we have begun the reform of equity mar ket capitalization.At the same time,China’s "Company Law" and "Secu rities Law" were promulgated successively and played an important rol e in consolidating the reform results of the capital market and further improving the construction of China’s capital market.In the conte xt of the split share structure reform,the liquidity of China’s list ed companies’ equity has increased.At the same time,investors are e ncouraged to actively participate in capital market transactions and encourage financial innovation activities to provide the necessary fo undation for the listed company’s equity pledged repo transactions.C hina’s capital market is becoming more and more active with the suppo rt of the system.In the system,securities companies can participate in the pledged repurchase transactions of listed companies’ equity s tocks.Increased demand has begun to find more convenient and efficie nt financing methods.Under the combined effect of system and economi c development,the listed company’s equity pledged repo transaction h as ushered in an expansion-type development period in China’s capital market.It is precisely because of the lack of necessary regulatory requirements and regulations that the number of listed companies’ equ ity pledged repo transactions has surged.To pursue benefits and igno re the quality of transactions and collateral,market participants ha ve buried the risks of current equity pledged repo transactions Hidde n danger.Facing the liquidation of equity pledged repurchase transac tions of listed companies caused by fluctuations in the capital marke t,regulators are gradually aware of the risks and threats under the transaction and take corresponding measures and issue relevant regula tory rules to enable listed companies the risks of equity pledged rep urchase transactions have been eliminated,and necessary legal guidan ce has been provided for the orderly development of future transactio ns.By combing the historical evolution of listed companies’ equity p ledged repo transactions,it can be found that behind the evolution o f this transaction model corresponds to changes in China’s economic d evelopment.Under the simple commodity economy,the trading activitie s of market entities were relatively simple and limited in quantity.Therefore,traditional equity pledged loan activities were enough to meet the transaction needs of market entities at the time of economic development.However,with the deepening of the reform of the market economy system in our country,our economy has ushered in a period o f rapid development.Corresponding to this economic development,the trading model of market entities has become rich and complicated.At the same time,the market entities’ demand for liquid funds in tradin g activities has also increased.In the context of China’s encouragem ent of financial innovation,the entity began to explore more efficie nt and convenient financing channels,and gradually formed a transact ion model of equity pledged repo.In today’s economic globalization,as the global economy enters the context of financialization,China,as a large developing country,participates actively or passively in the historical process of economic financialization.With the trend o f economic financialization,China’s economy has developed rapidly wh ile also laying down financial risks.It is against this background t hat listed companies ’equity pledged repurchase transactions have ent ered a stage of rapid development and excessive pursuit of market max imization of interests.As a result,listed companies’ equity pledged repurchase transactions have neglected the value requirements of sec urity,which has provided for China Financial markets pose a threat t o security.In addition to the background of economic development,be hind the widespread development of China’s current listed companies ’equity pledged repo transactions,there are also the effects of China’s institutional factors,that is,the constraints of legal and regul atory authorities on the reduction of shareholders’ holdings by liste d companies.China’s legal and regulatory agencies,based on the prot ection of the legitimate rights and interests of listed companies,ca pital market investors,and other entities,make necessary restrictiv e regulations on the reduction of shareholders’ holdings of listed companies.However,to maximize the benefits of listed companies,share holders of listed companies can avoid the constraints of the "reducti on rules." In the absence of a regulated transaction method for equit y pledged repo transactions,shareholders can reduce their holdings i ndirectly.Repo transactions have become a new “arbitrage” method f or shareholders of listed companies.After analyzing the economic and institutional background of the formation of the equity pledged repo transaction,the first chapter and the second section analyze the ch aracteristics of the listed company’s equity pledged repo transaction from a legal perspective.First,this article considers that the lis ted company’s equity pledged repo transaction is an "alienation" of t raditional pledged legal behavior.The basic idea implied in this con clusion is that listed companies’ equity pledged repo transactions us e the pledge legal behavior in the traditional guarantee legal system as a template.However,different from traditional pledges,a new tr ansaction model has been developed to satisfy non-Realization of the purpose of the transaction secured by debt.Secondly,from the persp ective of the scope of the entities involved in the listed company’s equity pledged repurchase exchange,it shows structural characteristi cs.In addition to equity pledged repurchase transactions,in additio n to the two parties involved in the transaction,the financial issue r and the acquirer,they also involve stakeholders,including listed companies,other shareholders of listed companies,and investors in f inancial markets.In addition,it also involves securities companies,exchanges and securities registration and settlement agencies that p rovide auxiliary services for equity pledged repo transactions.Final ly,the equity pledged repo transaction is not only a traditional tra nsaction mode for the guarantee of creditor’s rights under a simple m arket economy but has evolved into a more specialized and more comple x transaction activity with financial attributes.In addition to analyzing the peculiarities of the equity pledged repo transaction itsel f,this section also highlights the particularity of using listed com pany equity as the equity pledged repo transaction through comparison with the limited liability company’s equity pledged repo transactio n,and the dangers of its trading risks.The third section analyzes t he economic attributes of the listed company’s equity pledge repurcha se exchange from the perspective of economics and provides a multi-di mensional reference for the subsequent targeted legal regulatory syst em design.From the perspective of economics,equity pledged repurcha se transactions are transactions with efficiency advantages and fairn ess characteristics,which can provide a convenient and fair financin g method and a basis for interest protection for transaction entitie s,but at the same time,equity pledged repo transactions There is al so a second type of principal-agent problem in China,which is prone to conflicts of interest between large shareholders and small and med ium shareholders of listed companies.Large shareholders use their ad vantages in position and rights to infringe the rights and interests of small and medium shareholders.The second chapter analyzes the necessity of legal regulation and the value conflicts that may be involved in the legal regulation of trading activities,with a view to designing and framing the specific rules of legal regulation.The second chapter has three sections.Th e first section analyzes the negative externalities of the listed com pany’s equity pledge repurchase exchange,including the impact of tr ading activities on the interests of small and medium shareholders of listed companies,the impact on the interests of listed companies,a nd the financial market.The impact of operating order and efficienc y.The impact of the listed company’s equity pledge repurchase transa ction on the interests of small and medium shareholders is mainly man ifested by the large shareholders’ pursuit of personal interests,while neglecting the exercise of minority shareholders’ rights and inter ests protection in listed companies,infringing the rights of small a nd medium shareholders;listed companies The impact of equity pledged repo transactions on the interests of listed companies is mainly ref lected in the negative impact of large shareholder equity pledges on the company’s goodwill and stock prices;the impact of listed company equity pledged repo transactions on the financial market is mainly m anifested as the disposal of listed company stocks will aggravate pri ce fluctuations in the securities trading market and affect the stabi lity of the financial market.The existence of the externality of the listed company’s equity pledge repurchase transaction has become a n ecessary basis for it to be regulated by legal rules.The second sect ion is based on the externality analysis and analyzes the balance bet ween transaction efficiency and economic security value for the coord ination of the conflict between the personal interests of shareholder s and public interests that may be involved in legal regulation and t he formulation of legal rules.From the point of view of the rights o f the main body of the transaction,the pledged repurchase transactio n of the shareholders of the listed company stems from the shareholde rs’ right to freely dispose of their shares,and the freedom to exerc ise their rights should be recognized and protected by law.However,from the perspective of the externality of its trading behavior,the result of the trading behavior affects the interests of many entitie s.Therefore,in the legal regulation of the equity pledge repurchase transaction,the coordination of the individual interests of the equ ity and the social interests should be considered.Equity pledged rep urchase transactions are highly efficient financing models.However,in the case of improper or excessive financing by listed company shar eholders,the results will pose a threat to the order and security of the financial market.For the legal regulation of equity pledged repo transactions,it is necessary to regulate the risk of security risk s to the financial market.At the same time,the realization of the e fficiency value of equity pledged repo transactions should also be co nsidered.The legal regulatory system design should be balancing the value balance between transaction efficiency and economic security.T he third section is based on the analysis of interest coordination an d value balance of legal regulation.The paper proposes that private law and public law should be used in a coordinated and co-administrat ive manner to effectively realize the legal regulation of the pledged repurchase transactions of listed companies’ equity,which protects individual rights and freedoms.It also safeguards the public intere st;it not only respects the realization of transaction efficiency va lue,but also guarantees the value pursuit of economic security.Ther efore,it is necessary to form a joint force through the means of pri vate law autonomy and public laws and regulations to effectively prev ent and resolve the risk of equity pledged repurchase transactions.The third chapter of the thesis analyzes the risks of the pledge d repurchase transactions of listed companies in China in practice ba sed on the analysis of transactions in the first two chapters and the review of regulatory theories,and conducts a type analysis,combine d with relevant rules outside the domain.Examine China’s existing la ws and regulations on equity pledged repo transactions.The first sec tion classifies the risks of the listed company’s equity pledge repo transactions.This article divides the main risks in practice into th ree types: market participants’ moral hazard,market risk,and defaul t disposal.For different types of risks,targeted regulatory measure s should be implemented to resolve existing risks and prevent and con trol future transaction risks.This article believes that the reason for the liquidation of listed companies’ equity pledged repurchase tr ansactions due to market fluctuations is the objective of market risk.As for the inherent volatility risk in the market,it is difficult for the law to prevent and resolve it by means of regulation,and re levant market participants need to make their own judgment.The legal regulation can effectively regulate the market subject’s moral hazar d and orderly breach of contract disposal.Based on the typed positio ning of risks,we can relatively examine the relevant legal systems i n my country.The second chapter of Chapter 3 compares the institutio nal differences of the pledge system in the traditional guarantee leg al system of the civil law system and the unified chattel guarantee t ransaction system in the Anglo-American law system.Compared with the countries of the civil law system,China’s "Guarantee Law" and "Prop erty Law" have obvious differences in the design of specific rules co mpared with other countries of the civil law system.The more promine nt difference is that China is led by the theory of the property law the design of the guarantee legal system fails to fully consider the flexible operation of the guarantee system in the commercial field an d even the financial field.The principle of traditional civil law re gulation is used as the standard for the design of the guarantee lega l system,which is difficult to meet the flexibility of transactions in commercial and financial practices.Compared with the Anglo-Americ an legal system,secured transactions are an independent transaction mode in commercial transaction activities.The United States’ "Unifor m Commercial Code" specifically stipulates secured transactions and u ses the concept of "security interests" as a unified concept to contr ol the types of rights,like pledge,mortgage,liens and other specif ic guarantee situations.Compared with the unified guarantee legal sy stem,the existing legal system based on the division of civil rights in my country is difficult to transplant in a simple form,however,the guarantee legal rules involved in the commercial perspective can provide a useful reference for the improvement of my country’s guarantee legal system.The thesis also analyzes the relief measures of the local government of our country in response to the risks of the equi ty pledged repurchase transactions of the listed companies.Regarding the current measures taken by local governments to rescue the risks of equity pledged repurchase transactions of listed companies,this a rticle has reservations.At present,the bailout measures of local go vernments are only a short-term "rescue" action against the threat of liquidation caused by market risks.This government action is shortterm and cannot form a long-term measure of risk prevention and mitig ation.Effective mechanism.In addition,if the government intervenes improperly,it will cause more serious "government failure",which w ill increase the government debt and affect the normal operation of t he market.In order to form a long-term legal regulation method for e quity pledged repo transactions,it is necessary to improve the exist ing regulatory measures and regulatory concepts in a targeted manner,that is,to orderly guide the existing risks of agglomeration and li quidation,and to newly the equity repurchase transaction is effectiv ely restrained to prevent the accumulation of future risks.This pape r believes that the reasons for the market liquidation of listed comp anies’ equity pledged repo transactions are due to the objective exis tence of market risks.Regarding the inherent risk of fluctuations in the market,it is difficult for the law to prevent and resolve them through regulatory means,and it is necessary for the relevant market participants to make their own judgments.What legal regulation can effectively regulate is the moral hazard and orderly breach of contra ct of market subjects.Based on the typed positioning of risks,the r elative legal systems in China are examined accordingly.Chapter III Section II selects Germany,Japan,and France as typical countries of the civil law system and compares the legal rules on equity pledge i n its legal system with China’s legal system of equity pledge.Although China is also a statutory law country,China’s "guarantee law" and"property law" are significantly different from other civil law coun tries in the design of specific rules.The most prominent difference is that our country is dominated by the theory of property law.The d esign of the guarantee legal system fails to fully consider the flexi ble operation of the guarantee system in the commercial field and eve n the financial field.It is only based on the principles of traditio nal civil law regulation as the standard for the design of the guaran tee legal system.The need for flexibility and efficiency has certain limitations.Compared with the common law system of the United State s and the United States,secured transactions are an independent tran saction mode in commercial transaction activities.The United States Uniform Commercial Code specifically stipulates secured transactions and uses the concept of "securities and interests" as a unified conce pt to guide the types of rights.Specific pledges,mortgages,liens a nd other specific guarantees.Compared with the unified legal system of guarantees,the existing legal system based on the division of civ il rights in China is difficult to transplant in a simple form.Howev er,the legal rules of guarantee involved in the commercial perspecti ve can provide useful reference for the improvement of China’s guaran tee legal system.Based on the legal regulations on equity pledges in civil law countries and common law countries,this article puts forw ard a comprehensive suggestion to China’s relevant legal system,that is,to establish the concept of "equity secured transactions" in Chi na’s commercial thinking and use this as Establish related legal syst ems.First of all,the transaction activities that use "equity" as th e security object have financial innovation properties,and in practi ce,the equity pledged repo transaction is only one of the types of t ransactions that use equity as the security object,in addition to eq uity There are many specific situations such as income right trusts and equity income right pledges,but in essence,they are based on the economic value of equity.Secondly,traditional legal laws and regul ations based on the concept and method of civil law are difficult to meet the interests of financial practice.The need for balance makes it difficult to protect the interests of other entities other than th e transaction subject.Finally,the concept of "equity pledged repo t ransaction" is also difficult to meet the classification of transacti on behavior in our civil law theory.From the perspective of civil la w theory," "Pledge" and "repurchase" are two different trading activ ities,and it is difficult to integrate them into one trading activit y.Therefore,this article proposes the concept of "equity-secured tr ansactions",with all transaction activities that use equity value as a guarantee in practice.The fourth chapter is to analyze the moral hazards in the equity guarantee transactions of listed companies,analyze them from the per spective of legal regulations and make suggestions for improving the legal system.Through the regulation of the main body to control the risks of the listed company’s equity secured transactions,this artic le mainly uses the self-discipline management method of the listed co mpany’s shareholders’ internal agreements,the listed company’s equit y guaranteed financial institutions as the counterparties to the risk management and control,and the stock exchange,The external supervi sion function of the securities market regulatory agency has been eff ectively brought into play.These aspects work together to prevent an d control the risks of equity guarantee transactions of listed compan ies.This article proposes the following thinking path: At the level of internal management among listed company shareholders,listed comp any shareholders have equal legal status and are the owners of listed companies.Therefore,to realize the overall interests of listed com panies and protect the interests of other shareholders,Necessary restrictions on shareholders’ rights formed by consensus are legal and r easonable.The realization of the autonomy rules among shareholders o f listed companies requires the shareholders of listed companies to h ave a certain awareness of rights protection.In the practice of Chin ese companies,the awareness of shareholders’ self-interest protectio n is weaker than that of companies in the UK and the United States.O ne of the important manifestations is the obvious homogeneity of the company’s articles of association.In this regard,China’s "Company L aw" can make necessary rules and guidelines for the protection of equ ity autonomy rights and interests to form effective autonomy among sh areholders.At the level of counterparty risk management and control of equity guarantee transactions of listed companies,the financial s ponsors of equity guarantee transactions of listed companies are gene rally financial institutions,and financial institutions,in addition to providing the necessary funds for shareholders of listed companie s,are special entities in the market.Its behavior is subject to the supervision of China’s financial regulatory authorities and needs to comply with the requirements of regulatory rules,that is,financial institutions need to bear the necessary compliance responsibilities.Risk management is an important compliance responsibility that finan cial institutions need to assume.On the one hand,financial institut ions,as counterparties to equity guarantee transactions of listed co mpanies,have the right to inspect and supervise the use of sharehold ers’ funds by listed companies to monitor risks in real time.On the other hand,financial institutions,as the objects to be regulated,n eed to fulfill the requirements of regulators on their risk managemen t and control.Therefore,the strict performance of financial institu tions in the equity guarantee transactions of listed companies can ef fectively prevent and control the risks of listed companies’ equity g uarantee transactions.One of the important ways for financial institutions to strictly perform their responsibilities is to keep track of the equity guarantee transactions of listed companies,and to perfor m the negligent behavior of financial institutions makes them bear th e necessary supervision responsibilities.From the perspective of the external supervision of stock exchanges and securities regulatory au thorities,on the one hand,external regulators can only take the neg ative externality regulation of listed companies’ equity guarantee tr ansactions as a limit,so their regulatory means are relatively limit ed.However,one of the most effective ways of external supervision i s to restrict the equity guarantee transactions of shareholders of li sted companies through the establishment of information disclosure sy stem rules.At the same time,it provides important investment decisi on information for other financial investors to minimize the moral ha zard of shareholders of listed companies caused by information asymme try.The fifth chapter of the thesis focuses on the improvement of the rules for the disposal of the stock company’s equity guarantee trans action defaults.At present,China has accumulated many equity dispos al cases after the equity guarantee transactions of listed companies defaulted.For the resolution of the risks of equity guarantee transa ctions of listed companies,on the one hand,the number of equity gua rantee transactions of newly listed companies should be controlled fr om the root cause,and the necessary prevention of the concentration of risks of equity guarantee transactions of listed companies should be prevented for a longer period of time in the future;On the other hand,one of the important measures to mitigate the risks of equity g uarantee transactions of existing listed companies is to use a unifor m,effective and minimally affected disposal method to dispose and un block the equity of existing listed companies that have defaulted to reduce the equity of listed companies.Regarding the laws and regulations governing the disposal of equity guarantee transactions of liste d companies by default,the default behavior of listed companies’ equ ity guarantee transactions should be identified first,and risks shou ld be identified in time to reduce the degree of losses.In addition to the general borrowing behavior of the debtor when it fails to perf orm,the listed company’s equity guarantee transaction contract gradu ally adds a precursory default event clause.When a listed company an d its shareholders have a technical default or other cross-default si tuations the financial investors can timely identify the possible def ault risks of listed companies or shareholders,and exercise security rights in a timely manner to reduce the actual default losses of lis ted company shareholders and security holders in equity guarantee tra nsactions.In addition to the necessary advance identification of the default behavior of listed company equity guarantee transactions,th e disposal measures for different types of listed company equity guar antee transaction models should also be different.For the on-site eq uity guarantee transactions of shareholders of listed companies,the main disposal measure is to dispose of the secured equity by way of o n-site liquidation.However,in practice,there is some controversy a bout the liquidation of securities companies.For example,the securi ties company did not adopt the liquidation method,but chose to claim the realization of its rights through litigation.The shareholders r aised objections to the securities company’s litigation behavior;In addition,for the further expansion of shareholder losses caused by s ecurities companies’ neglect to exercise their right to liquidate pos itions,securities companies shall bear corresponding liabilities.Th is article argues that securities companies,as counterparties to lis ted companies’ equity guarantee transactions,have the right to choos e whether to protect their legitimate rights and interests through li quidation.In this regard,securities companies have the freedom to choose.At the same time,after the default event of the equity guaran tee transaction has occurred,the securities company shall promptly t ake necessary measures to control the further expansion of the losse s,and the further expansion of the damage caused by the securities c ompany’s neglect to exercise its corresponding rights.Loss securitie s companies cannot claim corresponding compensation to shareholders.For the behavior of OTC secured transactions by shareholders of liste d companies,when the equity held by shareholders of listed companies has restrictions on sales,it is difficult to achieve financing thro ugh on-site equity secured transactions,and only through more relaxe d OTC equity Guaranteed transactions fulfill fina...