Research On Legal Problems Of Convertible Bonds In Venture Capital

The venture capital (VC in short) as an engine of economic in 21st century needs a series of laws and regulations. The selection of financial instrument is one of the most important factors to what VC must experience. This paper is to research the legal system of venture enterprise issue convertible bonds by using the methods of comparative analysis, uniting theory with practice and legal economics as well. I analyze the issuing system, converting system and protection system of the investor at the venture enterprise issue convertible bonds.The development of venture enterprise can be divided into several stages, in this paper, I analyze the closed joint stock limited venture enterprise which has got some market share on the developing stage. Through the analysis of recent law and the relevant experience of advanced countries, I research some of the most important problems in our legal system. Apart from the preface and the final, this paper contains four parts.In part 1, I analyze the basically theoretical problems and the value of the convertible instrument in VC. Firstly, I introduce the concept of VC and its problem of agency. Then, I introduce the concept and legal characteristic of convertible bonds. After that, I analyze the necessity of the establishment of convertible bonds in VC. Finally, I research the feasibility of the establishment of convertible bonds in VC, this part is the theoretically logical beginning of this paper.In part 2, I analyze the issuing system of convertible bonds in VC. I divide it into three parts. Firstly, I research the issuer system of convertible bonds, with Chinese recent law and the experience of advanced countries. Then, I research the method of issuing, especially the method of private placement. Finally, I analyze the conditions of private placement, including decision of issuing, the qualifications of issuing target, and the restrictions of issuing and information disclosure.In part 3, I research the convertible system of convertible bonds in VC. The convertible characteristic of convertible bonds is a core of the mechanic. This part include the legal characteristic of convertible right and the result of exercising of convertible right.The last part of this paper focus on the protection of bondholders. Firstly, I introduce the rights of venture investment institution as a bondholder. Then I try to research the legal protection of each kind of right in detail.