A Study On The Legal System Of Enterprise Asset Securitization

Since the70s of last century when invented, securitization has quickly developed in countries all over the world and become an important financing tool. Securitization of enterprise asset is on the basis that the technology of securitization of mortgage has developed to a certain stage. Securitization of enterprise asset revitalizes the companies’fixed assets and eases their financial difficulties, and by techniques of structuring and layering, it reduces the cost of financing, enriches securities varieties and flourishes security markets, leading to the promotion of economic growth.This paper focuses on how to establish the legal mechanism of securitization of enterprise asset. By catching the key elements of securitization of enterprise asset including the underlying assets, special purpose vehicle, assets transferring and the controlling of risks and with the knowledge of economics and accounting, the Paper makes a comprehensive analysis toward the legal mechanism of securitization of enterprise asset and proposes legislative suggestions according to the experience of foreign countries and the reality of China. Also, the Paper analyzes the problems of securitization exposed in subprime crisis in the U.S. and thus proposes suggests, hoping that the legal mechanism of securitization of enterprise asset can be fixed.The full text is divided into five chapters:The first chapter is an overview of securitization of enterprise asset, preparing for the statement of legal mechanism in the following content. First, the Paper uses the historical research method to introduce the concept of securitization of enterprise asset, and then argues the necessity to promote the securitization of enterprise asset from the perspectives of originators, investors and macroeconomics. After that, the paper introduces the main subjects involved and the general structure. Finally, it states the pilot and legislation situations of securitization of enterprise asset in China.The second chapter analyzes the underlying assets of securitization of enterprise asset. First, the Paper uses the knowledge of economics and accounting to give a deep discussion on the nature of underlying assets, and points out the four possible types of underlying assets:real rights, creditor’s rights, intellectual property rights and future rights. After that, descriptions and analyses of each kind of assets are done one by one, followed by the general analysis of their transferability. Finally, based on the specific circumstances of our country, legislative suggestions are proposed.The third chapter notes the core of the structure of securitization of enterprise asset:special purpose vehicle (SPV). Starting with their aims and legal characteristics, the Paper points out the usual types of SPVs over the world, then discusses the specific asset management plan which is the SPV of securitization of enterprise asset in China and proposes legislative suggestions.The fourth chapter analyzes the important step of securitization of enterprise asset:assets transferring, pointing out that for the purpose of realizing the bankruptcy isolation from originator, the assets transferring shall meet the standard of "true sale". After that, the Paper notes the recognized standard of "true sale" based on the experience in the U.S. and proposes legislative suggestions suitable to our country.The fifth chapter concludes the systematic risks of securitization exposed in the subprime crisis in the U.S. It leads to the investors’overtaking of risks that the quality of underlying assets cannot be effectively controlled, the moral hazards of originator, assets management and intermediaries exist and investors over rely on credit rating agencies and do not fulfill the obligation of careful investment. Once the risks occur, the market panic may be resulted and leads to financial crisis such as the crisis in the U.S. in2008. Therefore, we are noted that during the establishment of legal mechanism, the motivations of each party shall be considered and united through regulations.