On The Effectiveness Of China's Equity Right Of Pledge

It lies on the security in the exchange value for the significance of pledge of equity stake. By exploring the value of intangible assets, pledge of stock right plays a crucial role in transferring static stock equity into dynamic business assets, thus being very important from practice perspective. With the real economy being affected by global financial crisis, pledge of stock right, with its advantage of fast financing and valence alternation convenience, has gradually become one of the most important ways for those small and medium enterprises to raise fund. The effect of pledge of stock right touches only on limitation to the stake rights, rather than the transfer of substantive rights, making it possible for the shareholders to stay in company management. Therefore, research on pledge of stock rights, which does not substantially affect company operation, but also raise floating funds, can provide reference for modern credit economy development in terms of theoretical support and practice improvement.Logically starting from its special nature and focusing on the effectiveness of pledge of stock right, while based on the relevant laws and regulations, judicial practice and typical cases, drawing reference from related research results in legislation and academia in other countries, the paper, through systematic analysis to the effectiveness-related issues in pledge of stock right, attempts to show its own view in resolving problems existing in the judicial practice in China. In addition to the introduction and conclusion, the paper is divided into four parts.The first part demonstrates the concept of pledge of stock right. This part examines connotation of the Concept and unifies the title on the basis of characteristics, followed by explanation to various views towards the nature of equity. Being an independent and exclusive civil right, stock interest is pledged with all the rights. Then this part studies its historic resources, emphasizing on the legislation in relevant continental law countries through comparative approach. Thus, a conclusion is drawn that stock interest can be recognized as pledged objects, and the nature of stock interest results in special problems caused from effectiveness issues of pledge of stock right. Thereafter, the paper illustrates the concept of pledge of stock rights from angle of Chinese law, and in connection with practice, summarizes types of pledges of shares to which are put restrictions.The second part concerns with interpretation to the extent of effectiveness. Beginning with explanation on the scope of general claims, the paper by virtue of specific cases analyzes scope of effectiveness upon the guarantees in terms of pledge of stock right, accounts that the scope of guarantees effectiveness includes share interests, fruits, subrogation subjects and allotment of shares; while the scope of secured claims effectiveness does not only include main claims and interests, compensation, penalty, fees of storage and realization of the right quality, but also cover the expenses of assessing company's assets and share custody, excluding defects equity pledge damages.The third part relates to the effectiveness on the parties with pledge of stock. The pledge of stock binds its effect to quality shareholders, pledgee and the third person. The part analyzes rights and obligations of shareholders, elaborates total of usufruct and restricted right of self-benefit enjoyed by the quality shareholders resulting from restricted shares. The essay also analyzes rights and obligations of pledgee, whose rights set priority of payment on the core, constructing an integrated system to the pledgee together with other rights for ensuring realization of right quality. The rights and obligations of turn pledgee are also included in the discussion of turn right quality. The part finally gives analysis on the rights and obligations of the third person, taking account of equity not simply property right thereupon the general creditors can not be challenged by pledgee in terms with pledge of equity. In addition, the part also discusses the obligation of the parties.The fourth part discusses the realization of equity pledge. The discussion is made from perspective of conditions, manner, during, procedures in achieving equity pledge. This part in particular clarifies special provisions in realization of equity pledge in different forms of enterprises, summarizing a practice-oriented way to realize equity pledge, illuminating equity pledge places usage as core in property right value. Finally, the part explores procedures to realize equity pledge from angle of proper dispute settlement and truth protection.