The Study Of Legal Issues On Investment In Creditor’s Rights

The radical value which corporation law pursuits is economic efficiency. In order toachieve this aim, the design of corporation law should boom capital market, and usethe social wealth fully. Today, the society has entered an age of contract, and a largepart of people’s property exists as creditor’s rights. So it is the necessary requirementof corporation law to put creditor’s rights in the investment forms and give full play toits financing function. In our Corporation Law which was amended in2005, the termabout investment forms is open and it is not strictly limited anymore. But this generaland fuzzy term is far from enough. Because the creditor’s rights have their ownfeatures and they are also various, the investment in creditor’s rights is verycomplicated. So there are more details to research further to establish a perfect, safeand effective investment institution of creditor’s rights. This thesis was completedunder this aim.Investment in creditor’s rights is an institution that investor (the creditor) takes astake in corporation in their creditor’s rights to the corporation or to a third party, thatis converting creditor’s rights into stock. Its essence is the transfer of creditor’s rights.At the legislative level, our country has a process from denying it to gradualconfirming it, and at the practical level, the attitude of our country is contradict. Theuse of investment in creditor’s rights and the limitation of it both exist. But in general,the establishment of this investment institution is a trend which can answer thecommercial practice. Especially investment in creditor’s rights to a third party, it hasnot been confirmed clearly by law, so it still has the space to be discussed and proveddeeply.According to the principle of company autonomy, it is reasonable and legitimateto put the system of investment in creditor’s rights into corporation law. Creditor’sright is a kind of transferable rights, and its exchange value has been admitted bymodern society. The independent property value of creditor’s right determines itsrationality as investment. Besides, it already has a superior position in modernproperty system, so the full use of its property value is very important to the development of commercial practice. Meanwhile, assets credit is not the only creditbasis of company. The diversity of credit basis of modern company is open toinvestment in creditor’s rights. And it is not contrary to the requirement of investmentform which is stipulated in article27of new Corporation Law.Investment in creditor’s rights has its feasibility, but not all the creditor’s rightsare proper for investing. According to the theory of illiquid contribution, investmentin creditor’s rights also needs to satisfy some eligibility requirements, which requirethe creditor’s rights are certain, have existing value, and have evaluability andindependent transferability. Those creditor’s rights which can not satisfy aboverequirements should be excluded from the investment forms, because they either havegreat risk or lack exchange value.Because creditor’s rights are un-dominated, appointed and non public,investment in creditor’s rights has greater risks compared with other forms ofinvestment. So when the investment institution of creditor’s rights established, weshould also design supporting measures to prevent and control the legal risks that mayhappen, such as limiting the proportion of creditor’s rights, establishing strictprocedure of investment, perfecting the liability mechanism of investment increditor’s rights and so on, and form an investment institution of creditor’s rightswhich is both efficient and safe to promote the prosperity and development ofcommercial practice.