A Research On Protective Regulations Of Conversion Right For Convertible Bond

Due to the special advantages of convertible bond, more and more enterprises use it as an important financing channel. However, the convertible bond has not been developed well in our country, which mainly because there are barriers in our regulations for such investment and financing method especially that the protection regulations for the conversion right of the creditors holding convertible bond is deficient and the advantages of creditors were often destroyed which makes creditors prefer to choose other investment methods. All the above discourages the development of convertible bond in our country.As for investors, conversion right is the core of creditors holding convertible bonds and they will gain more risk return once the convertible bonds converted, which is the eventual pursuit for the investors and which is also the fundamental reason for them to accept lower interest to invest convertible bonds. As for the issue corporate, when the convertible bonds are converted, its huge debt will be exempted and it will also gain stock premium and other profits. Thus, conversion of the convertible bonds is the mutual pursuit of investors and issue corporate and is the most important method to gain mutual benefit. So, the feature of conversion is the soul of convertible bonds and the effective protection of the conversion right is the key to perfect the regulations of convertible bonds. The perfection of protection regulations for conversion right will promote the effective protection of various rights of creditors holding convertible bonds so as to advance the thorough perfection of the regulations for convertible bonds and eventually achieve sound and orderly development of such investment method.Nowadays, the relative laws and regulations of our country have protected the conversion right of creditors holding convertible bonds in a certain extent. However, it is far from enough and there are several disadvantages in the existed relative laws and regulations:too general legislation, lack of maneuverability, low legislation level, holes and conflicts, delays in theoretical researches, lack of legislation experiences and lack of enough importance on legislation, etc.As described above, we could perfect the protection regulations for conversion right in such ways:to further enhance measures to oppose dilutions, to establish the board responsibility investigation mechanism, to perfect and amend items, to perfect the advance protection regulation, to perfect the conference system for creditors holding convertible bonds, to perfect the trust system for convertible bonds, and so on.