Research On The Legal Problems In The Process Of Debt-to-equity Swap

The first section of the paper starts with the concept of debt-to-equity swap, thenit expatiates on the two kinds of debt-for-equity swap in our country，which leads tothe focus of this paper——commercial debt-to-equity swap, and then itscharacteristics is analyzed.There have already been so many laws and regulationsregarding to policy debt-to-equity swap, but so little about the commercial one, sowhen I talk about the commercial one, I will combine the commercial debt-to-equityswap with the theory and practice of the policy one, for they are both debt-to-equityswap and possess the same quality. The same legal conflict which the two kinds ofdebt-for-equity swap face is the legitimacy of debt financing. Whereas，it is resolvedbecause of the revision of Company law. In practice, policy debt-to-equity swapimplements smoothly under the support of government, while the commercial onestuck because of the industrial and commercial registration，being in its infancy all thetime. Along with the action of " measures for the administration of registration ofcompany debt-to-equity", the problem of the industrial and commercial registrationhas already been settled because of the unified operation rules。The second to fourth sections of this paper focus on the legal issues in theprocess of debt-to-equity swap, including the legal issues in the three stages ofdebt-to-equity swap, that is, the launching of debt-to-equity swap, share holding andequity withdrawing. The second part is mainly about the launch of commercialdebt-to-equity swap. The launching of commercial debt-to-equity swap concerns theinterest of the government, the shareholders and relevant creditors. In this section,theinterest of each subject is analyzed. The third section focuses on interest game ofshare holding. There will be interest conflict because of different position among theshareholders, and thus it may influence the long-term development of the corporations.The fourth section is about the equity withdrawing. Smooth ways of equitywithdrawing can solve the trouble back at home for shareholders，which encourageinvestments of debt-to-equity swap. This section discusses some common ways ofequity withdrawing.The fifth section offers the improvement suggestions for debt-to-equity swap,which are based on the problems that mentioned above.This section discussesimprovement suggestions mainly from three aspects including governmentintervention, corporate governance and equity exit. As for government, commercialdebt-to-equity swap is equal commercial behaviors, there should be lessadministrative intervention. As for corporate governance, the system of shareholders,directors and supervisor should be improved. As for equity withdrawing, this sectionmainly discusses the directions of capital market according to the characteristics ofenterprises in our country. Whether commercial debt-to-equity swap will operate extensively in practice ornot, it is associated with not only the opportunity and risk the system itself bringsabout, but also the social environment，market environment，legal environment andother problems. Finally the sixth section prospects on the development of commercialdebt-to-equity swap, expecting it will have a new start because of the action of"measures for the administration of registration of company debt-to-equity", and willopen up a new path on corporative investment approaches in our country.