On Credit Subscribed Capital

Credit subscribed capital refers to making creditor's rights to the third party or the company as capital contribution in order to gain shareholder's position in the company. With the development of economy, the creditor's rights realized from the subjective personal relationship to the objective economic relations, gradually realized property and occupied superior position in the property law. As an important part of property rights, the creditor's rights is a kind of wealth in the market economy just as currency, physical, intellectual property and land use right and so on. It can not only satisfy the need of commodity circulation, but also become the capital of creating profit with other resources.The creditor's rights own relativity, concealment and qualitative attribute and the diversity of forms in addition to although credit subscribed capital has been to recognized, implementation details related to credit subscribed capital haven't been existed in 05 Company Law. The above aspects result in so many difficulties in practice. This makes straightening out credit subscribed capital become necessary. This paper tries to discuss these areas following the conditions of credit subscribed capital, the classifications of credit subscribed capital and the law regulations etc so as to delineate the outline of credit subscribed capital. There are four chapters in addition to the introduction of thesis and the conclusion.The first chapter mainly expounds the concepts of the creditor's rights, transference of creditor's rights and credit subscribed capital. As creditor's rights in modern law having grown its importance, discuss the possibility and necessity of the creditor's rights as a way of capital contribution. According to the contract theory of relationship,analyze the relations and distinctions between credit subscribed capital and transference of creditor's rights, and then conclude applicable law order of credit subscribed capital: when no existing relevant regulations in Company Law , apply the relevant provisions about transference of creditor's rights in Civil Law. Finally, summarize all kinds of attitudes to credit subscribed capital as a way of investments: loose attitude in common law countries, the trend of unloosing gradually in civil law countries and credit subscribed capital has been allowed in Company Law in China.The second chapter basically analyses and discusses the relevant conditions of credit subscribed capital. This chapter is based on"five essentials theory"of illiquid contribution's conditions in abroad academic circles. In combination with generalized regulations of credit subscribed capital in Chinese corporation law, discuss four conditions of credit subscribed capital: the first, the creditor's rights as capital contribution can been valued currency; the second, the creditor's rights as capital contribution should possess legitimacy; the third, the creditor's rights as capital contribution should possess transferability; the last, the creditor's rights as capital contribution should possess helpfulness to the company's production and management.The third chapter: credit subscribed capital is classified. On the basis of the classification, some special creditor's rights can be explored as ways of capital contribution or not. According to subject of obligation, object of obligation, the time of transference of creditor's rights for the standard, credit subscribed capital is classified. Not only creditor's rights to company and money claim may be investment modes, but also creditor's rights to the third party and non-monetary claim may be investment modes. Creditor's rights can be investment modes not only when the company set up but capital increased as well. On the basis of the classification, some special creditor's rights are discussed. For example, in the company's liquidation process, the shareholders may not stand his company's creditor's rights and its unpaid shares be offset. Bad debt under certain conditions can be investment modes. Put forward to the suggestions of reference to relevant provisions in "Property Law" to registration of transference of creditor's rights and corresponding registration authorities. Discuss the marketization and monetization appraisal principles for claims. When creditor's rights invested, the realized rights and interests to transferee's company are not less than agreed equity consideration, investor has fulfilled his obligation of capital contribution, otherwise, investors should undertake the responsibility for defect of contribution. Shareholder's qualification can obtain after completing formalities of the transference of creditor's rights and transacting register of shareholder.The fourth chapter Puts forward to the opinions of my own about the specific designs system of credit subscribed capital. Discuss separately: Company Law should follow the principle of company autonomy. Respect for the views of the company's participants. Protect shareholders reasonable anticipation. At the same time, not to destroy self-adjustment mechanism of the market, the market can fully play its fundamental resource allocation function. Procedures with an open structure are able to provide for relatively loose investment environment to participants and so on. Based on the above, to overcome company autonomy limitations such as the parties'bounded rationality and lack of information integrity etc., the author thinks, procedural regulation should be to give priority to in credit subscribed capital in Company Law. Even if there is a need for substantive provisions, it should be only some of the abstract provisions and give the participants selective space. For China's current legislation, Company Law should introduce foreign equity lien and principle of times. The former can avoid the risk of passive capital reduction of the company based on shareholders'defect of contribution and not making up the balance. And provide a solution to ensure the company's capital adequacy. The latter strengthen the accountability to the shareholders of defective contribution and protect their legitimate rights of creditors and honesty shareholders by depriving or partially depriving the defective contribution's shareholders of the interests of claim sequence in the process of bankruptcy.