On The Regulations For The Investment Of Creditor’s Rights To The Third Party In Corporation Law

On the attitude towards the creditor’s right investment, the Corporation Law went through the process from denying to the limited attempt of political debt-for-equity swap, and then to the further expansion of non-political debt-for-equity swap, and then to the approval of the investment of creditor’s rights to the Corporation, but the attitude to the investment of creditor’s rights to the third party is not clear all the time. The modified Corporation Law in 2013 confirms the result of corporate capital and the reform of registration system, still adopts the legal capital system under the pattern of the corporate capital formation, but on the manner of the capital contribution, it no longer limits the first time’s amount of capital contribution and the installment payment deadlines for shareholders and sponsors and it makes the further improvement for the subscribed capital registration system. It abolishes the system of minimum amount for company’s registered capital. On the regulation of capital contribution form, it cancels the limit of minimum proportion of contribution in currency and the certification of registered capital, meanwhile makes related modifications of the registration system for the establishment of company. These changes establish the concept of corporate assets credit, weaken the administrative organ’s proactive regulations and supervisions on the stage of company’s establishment, expand the freedom of contract principle, clear the ideological obstacles of capital system for the investment of creditor’s rights to the third party. In addition, with the further development of creditor’s rights in modern times and the perfection of the assignment of creditor’s rights and non-currency property contribution, it becomes possible that creditor’s rights to the third party as a manner of the capital contribution under the new capital system of corporation.However, on the legislative level, due to the absence that the existing law has towards the investment of creditor’s rights to the third party, it lacks the related specification and guidance towards the range of creditor’s right that suits investment for the corporation and the obligations among related subjects. In practice, the application of the investment of creditor’s rights to the third party can only refer to the laws, regulations and the explanations of the debt-to-equity swap, which results in the circumstances of different creditor’s right standards, confusion and deficiency of each party’s rights and responsibilities. In addition, at the same time that the subscribed capital registration system reduces the cost of company’s establishment and activates the market, it also increases the inherent risk of creditor’s right investment to some extent. Faced with the opportunities and challenges brought by the corporation’s registration system reform to the investment of creditor’s rights to the third party, if the legislation cannot follow through promptly and effectively, it will result in the impracticability of the investment of creditor’s rights to the third party, which leaves a large quantity of property rights unused and existing economic resources wasted and goes against the integration and utilization of resources.Therefore, for the legislation perfection of the corporation of third party’s creditor’s right investment, on the one hand, there needs to refer to the assignment of creditor’s rights in the traditional Civil Law and the investment system in the capital system of the Corporation Law, so as to specify the guidance and rules of the investment of creditor’s rights to the third party. Firstly, as for the scope of creditor’s right that suits investment for the corporation, according to the constitutive requirement of assignment of creditor’s rights and the theory of non-currency property contribution, it has to be the creditor’s rights of contract with alienability and complete propertilization, which can be money claim or non-money claim, either credit in due or undue. Secondly, in the process of creditor’s right investment, the responsibility that the obligee and the obligor have to the assignee is:the investor takes the responsibility of handing in the certificate of creditor’s rights to the corporation and notifying the obligor of the facts and the responsibility of warranty against defects of title. The obligor takes the full responsibility for the corporation according to the contract and of the warranty against defects of title. Unless there are other contracts, the corporation has the right of requesting creditor’s right investors providing separate guarantee for their contributed creditor’s rights and restricted rights of creditor’s right investors obtaining the corporation stock and enjoying the rights of shareholders to some extent. In addition, as for the risk that may exist during the creditor’s right achieving in reality, there needs to perfect the ensuring mechanism of liability of investment of creditor’s right to the third party and there must be accountability for those including the creditor’s right investors, other sponsors and shareholders that agreed for the creditor’s right investment, the irresponsible senior executives and directors, so that to balance the relationship between the investment interest of shareholders and the trading interest of trading parties. On the other hand, from the perspective of establishment of market credit, improve the company’s information disclosure mechanism and the information and credit sharing mechanism, in order to make corporation information public and transparency. This is not only the most effective method to prevent the risk of creditor’s right authenticity in the investment process for the investment of creditor’s right to the third party, but also urges corporations to attach much importance and cultivate commercial credit, so as to improve the existing investment environment on the whole and develop market environment of benign competition.