Research On Several Legal Issues About Right Pledge Of Account Receivables

According to a survey conducted by World Bank in 130 countries and/or areas around world, financing involving account receivables is widely used in 83% of these countries and/or areas. In a global sense, financing using account receivables is an important financing channel for corporate financing. Real Right Law of the People's Republic of China, promulgated in 2007, stipulates pledge can be established on account receivables, which is a new statutory stipulation that satisfies the financing demands of medium and small enterprises on the legal level, and amplifies the means of right pledge in China, which is of great positive value for advancing the financial innovations of the Chinese financial institution.In the first chapter of this dissertation, the definition and scope of the word "Account Receivables" is set forth, and the necessity of the establishment of right pledge system applied for account receivables is discussed from three different angles, namely, the demand of corporate financing, financial innovation of banks, and the relevant legal system on right pledge of account receivables in other countries which can be used for reference in China. The second chapter of this dissertation analyses the legal relationship of right pledge of account receivables by four parts, namely, the legal nature of right pledge of account receivables, registration requirements and procedure, the exercise of right pledge and the rights and obligations of the pledger and pledgee. For better understanding of the characteristic of right pledge of account receivables, the comparison of the right pledge of account receivables and factoring business is provided, as well as the analysis of the difference and interrelationship between these two business models. As a new guaranty system beneficial to banks and their corporate clients, right pledge of account receivables also could give rise to various risks for the parties involved in this practice. So the third chapter of this dissertation is focused on the risk prevention and the establishment of implementing rules for a consummate system regulating this new practice. For banks to start this new business of right pledge of account receivables, it is necessary to classify the risks which banks can be exposed to during the practice. Then the prevention measures aimed at the different types of risks shall be conceived and further carefully taken. To solve the issue of risks resulted from legal system gaps or even blanks, the legislators of the country should further establish more implementing rules to consummate the legal system in this field, such as the coordination and reinforcement between the creditor's rights safeguard system and the registration system of the right pledge of account receivables under the real right law. Under Real Rights Law, the current legislation adopts the model of public registration for the solution to public notification, which is a key step of the whole practice of the right pledge of account receivables. To regulate the registration of the right pledge of account receivables, in the interests of the parties involved in this particular practice, under the authorization of Real Rights Law, People's Bank of China has preliminarily established the national registration system for the right pledge of account receivables. The risk prevention and control aspects of the right pledge of account receivables are further discussed and the author also gives some thoughts for further improvement of the registration system for the right pledge of account receivables.