Study On The Legal System Of Pledge Of Receivables

Originated from the Roman Law, the pledge of receivables has been widely used in Common Law countries. Although the history of pledge of receivables is short in this country, China has, with the enactment of the Property Law, related implementation rules and the operation of the registration system, built a relatively complete legal system on pledge of receivables. But we should also realize that the system is still problematic. For example, the pledge of receivables is not yet been fully understood; the right-obligation relation between the parties is not yet clear; the function of the pledge of receivables in solving small and middle sized enterprises’ financing difficulties is not yet been put to full use; the financial institutions’ capability in dealing with the pledge of receivables is need to be strengthened. Therefore, the writing of this paper is of theoretical and practical significance to some extent.This paper is divided into four chapters.Chapter Ⅰ is about the definition of pledge of receivables. This paper demonstrates basic information of the pledge of receivables, and highlights the differences between legal sense and accounting sense. In consideration of the huge influence, the legal value and practical value of pledge of receivables are also described in this paper. Finally, in order to demonstrate the independent legal status, this paper compares the pledge of receivables with those similar systems, such as assignment of creditor’s rights, the factoring and the alienation guarantee.ChapterⅡdescribes the effective elements, the coverage and the effectiveness of pledge of receivables. All these three aspects have been used to demonstrate its legal effect. In this paper, the effective elements are divided into two kinds, the formal requirements embrace the contract of pledge, the delivery of debt obligations, notification and registration, whereas the substantive elements are just like those in legal acts. The range effect of pledge of receivables is divided into the range of secured creditor’s rights and the range of subjects. While the human body effect can be divided into three aspects, the effectiveness of the creditors, the debtor and the third debtor.Chapter Ⅲ is about the status quo of legal system of pledge of receivables in China. In addition to the introduction of the registration system, the pledge of receivables’ practical usage is also been systemized and analyzed. With respect to the registration system, this paper discusses from three aspects, namely user management, registration and querying. Besides, this paper also introduces the application of pledge of receivables in business practice from three aspects, namely banks, securities firms and trust companies.Chapter Ⅳanalyzes the risk of this system, the problems of the registration system and the shortage of financial institutions in pledge affairs, as well as the corresponding improvement initiatives. The risk of pledge of receivables comes from three aspects, namely the risk of the object, the risk of clients and the other risks. With respect to the flaws of registration system, the design problems, the practical problems and the administrative problems are three main reasons. Moreover, the problems of financial institutions’ financing operations can be analyzed from the legal angle, the enterprise perspective and the financial perspective. In addition, this paper, on the study of above studies, also further proposes feasible suggestions.