| Public Private Partnership(hereinafter referred to as PPP) is an innovation of system supply and is in line with the new Public management theory that our government shall be responsible for the "steering" and the Public entities may put the effective management methods and technology of the enterprises into practice to improve their efficiency. Moreover, PPP Attracts social capital to participate in providing quasi-public goods may help to solve the problems of inefficiency and unfairness. Compared with privatization to completely deprive the functions of the government to provide public goods and that may result into risk concentration, PPP adopts a reasonable risk-sharing configuration to avoid the risk concentration and the public and the private are jointly responsible for the project.In practice, the local financing platform is confirmed not a good way to meet the funding needs incurred by the public service and is confronted with many problems, for instance, its legality and efficiency and transparency are in question and faced with financial crisis. In contrast, PPP has more advantages and our government has also recognized them. Therefore the government puts forward to promote PPP to provide public service in the budget reform and reform of local government debt.The success of PPP projects greatly depends on the financing. However, there are many legal issues in the financing and the existing law does not provide sufficient security. As a result, the financing and its legal issues are the focus of this paper. The main content of this paper is divided into five parts as follows:In the first chapter, the author intends to introduce the definition of PPP and analyze the reasons theoretically and practically why PPP is an innovation of system supply. Further, the public entities, the private partners, the project company, the lending banks and contractors are the main participants in PPP projects and their legal relationships are analyzed in this chapter.In the second chapter, the author intends to analyze the financing and its legal issues. The financing structure consists of equity financing and debt financing. The corporation capitals in equity financing, guarantees in debt financing and refinancing and the exit ways of capitals are main legal issues in the financing to be discussed separately below. Besides, the author further introduces the value of PPP and the notion of risk allocation in PPP which are critical to the analysis of those legal issues mentioned above.In the third chapter, the author intends to analyze the legal issues in corporation capitals. The public entities’ control over the project company and the capital contribution are two important issues. The roles and functions of the public entities may require certain degree of control over the project company and our law may need to make some arrangements. Besides, the amendment to the company law allows the shareholders to arrange the capital contribution issues in the articles of association and that may incur some vagueness in the capital contribution of the project company.In the fourth chapter, the author intends to analyze the guarantees in PPP. The government guarantee and the security interest on the project assets are two key issues. For the purpose of the analysis of the government guarantee, the author further states the legitimacy of the government guarantee, the notion of risk allocation in PPP and the enlightenment of the development of the local financing platform. Moreover, the legal issues in the establishment of security interest are caused by the reasons as follows. Firstly, the property right of the project assets is not clearly defined by the law. Secondly, the provisions of the floating mortgage and rights pledge in the property law are insufficient to meet the requirements of the floating mortgage and rights pledge in PPP. The author further indicates that we can learn from foreign countries and puts forward the suggestions to improve the guarantee system in PPP.In the fifth chapter, the author intends to analyze the refinancing and the exit ways of capitals. The key to the refinancing is how to balance the interests of the private partner and the protection of public interests. And make some arrangements in advance for the allocation of refinancing gains between the public entities and the private partner may help to solve the problem. The key to the exit ways of capitals is to set reasonable rules of the equity transfer to allow the private partner to transfer their shares and to ensure the new shareholders are qualified. |
