Equity Pledge Legal Issues

This dissertation presents a systematic study on the legal system of shareholding pledge, which bears enormous practical functions. The pledge of rights is stipulated in China's Law of Guaranty and it lays the legal foundation for shareholding pledge. As one kinds of pledge of rights, shareholding pledge has its own legal characteristics by which it differs from the pledge of movable property and pledge of rights. In virtue of its specific features, it obtains favor in the eyes of countries worldly. However, compared with the similar constitution of other countries, the existing regulations are too simple to leave some legal blankness, and what's more, some regulations of different laws are contradictive to each other. All the problems are blocks to the development of its functions. In order to optimize the legal system of shareholding pledge of China, the author makes a thorough exposition on it in the aspects of legal sense, establishment, legal effects, performance and the measures against the risks from the stocks with the approaches of logical reasoning and the marriage of the theories and practice, while uses the experience of other countries for reference. The whole content contains the following five parts:The first part makes an exposition on the appellation and its legal sense, the legal nature and its legal characteristics; and elaborates the reasons why the shareholding of limited company can be pledged; and at end of this part, its functions are dissected to attract more attention.The second part discusses the establishment of shareholding from two sides that the concerning parties should make a written contract and that should be publicized in specific ways. Firstly, the legal requirements of the shareholding of the limited company are free rather than getting the consent of the other shareholders according to the Company Law. And then pointsout that the subject matter of shareholding pledge is the comprehensive rights in stead of the property right; And then makes an analysis of the scope of the stocks which indicates that only some of them can be employed as the object excluding such kinds as the prohibited ones by laws and the restrained ones. Secondly, two important problems about the publicizing are expounded, one is whether or not to transfer the certificates of the shareholding to the pledger. The author maintains that the certificates should be transferred so as to differ from mortgage. Concretely speaking, the stock of listed company, because of its existence free of paper and the electrical trade style, should be registered at the stock exchange and on the register of members; to the stocks of non-listed company, if they are order stocks, they should be transferred to the pledger with endorsement and also be registered on the register members; if non-order stocks, they should be transferred to the pledger directly. Another one is how to optimize the register member.The third part expounds the legal effects. Generally speaking, it is far more enough to adhere to the regulations of the pledge of movable property because of its own features. There are four problems are discussed. One is the scope of guarantee; the second is the rights enjoyed by the pledger; the third is the rights enjoyed by the pledgee. On this point, the author analyses with emphasis that the right aiming to restrict the pledgee to sell the pledged shares is unfair to him and the relevant regulation should be remedied. The fourth problem is the effect against the third party, in other words, the effects should not go against the third creditor.The fourth part points out the conditions, the procedures, the ways when the right of pledge is put into execution.The fifth part expounds the measures against the risks of the shares. The author holds that different measures should be made before, at the time and after the establishment of the shareholding pledge.