The Sme Private Bond Legal System Research

May22,2012, the Shanghai Stock Exchange and Shenzhen Stock Exchangeofficially promulgated “SME private bond pilot approach” and its companion guide,which means the long-awaited class of high-yield bond began trial operation inChina, the current launch is the pilot of the SME private bond. June8,2012, theShanghai Stock Exchange announced that the first SME private bond successfullyissued in the Shanghai Stock Exchange. Issuer was the Suzhou East Man-madeCoated Glass Co., Ltd., the issued amount was50million yuan, Dongwu Securitiesas the underwriter. Since then, after a time of less than six months to prepare, theSME private bond originated in the U.S. private bonds, officially appeared in China.Under this background, the paper will be based on the existing laws andregulations of the SME private bond in China, thoroughly study the development ofthe private bond of the U.S. capital markets and its’ current legal system tocompensate the drawback of SME private bond system in China, and put forwardrecommendations to improve the existing system. The structure of this paper isdivided into the following four parts:In the first part, the paper will give a guided introduction of SME private bond,have an emphasis on defining the scope of its’ privacy; Secondly, throughcomparison of the public offering bonds and other private offering bonds,interpreting the issuance, trading mode, the scope of disclosure, the issuer’s scale,the issuing market and regulatory system and other aspects of the SME private bond system; Finally, points out that the system has a great practical significance inimproving Chinese capital market system and solving the current problem offinancing SME.In the second part, the paper will expand the perspective into overseas capitalmarkets, studying the development of the U.S. private bond market, and in-depthanalyzing the framework of the legal system of the U.S. private bond, especiallydetailed reading of the "144A rules", having a comprehensive analysis of the conceptof "trading private bond”, the qualified investor requirements and informationdisclosure requirements, and making a detailed comparison of the Chinese SMEprivate bond system.In the third section, the paper analyzes the legislative basis of the SME privatebond, including the basic laws and self-regulatory rule，and gives rise to theproblems of the current SME private bonds legal systemIn the fourth section, the author puts forward some suggestions for theperfection of the SME private bond system.