A Research On The Legal System Of Marketization Debt To Equity Swap

Debt-to-equity swap,is one of the ways of debt restructuring,but also the usual way to deal with non-performing assets.Based on the legal relationship,debt-to-equity swap is a complex trading relationship,on the one hand,the creditor to its creditor's rights to the implementing agencies,on the other hand,the implementation of institutional debt pricing,converted to investing conversion companies,having shares of the conversion companies.On October 10,2016,the State Council promulgated the Opinions on actively and steadily Reducing the Leverage Rate of Enterprises(Guo Fa [2016] No.54),and put forward the marketization and legalization of market-oriented.Market-oriented of the debt-equity swap officially came into being.The market-oriented debt-to-equity swap has a lot more prominent place than the previous round of policy-related debt(the last century 90's).The last round of policy-based debt-to-equity swap was acquiring bank bad debts mainly under the auspices of the government by the financial asset management company.The government designated some state-owned enterprises to implement the debt to equity restructuring of the debt.This round of market-oriented debt-to-equity swap is also a debt restructuring,but no longer dominated by the government,nor implemented by a single financial asset management company.It is consulate by a number of implementing agencies,banks and enterprises on the aspects of independent debt restructuring,such as the choice of enterprises,the transfer of the total plans,claimsand equity pricing,exit and so on.The mode of operation requires the market and legal system,and need to be carried out in an orderly manner.The Government does not assume the responsibility,nor use administrative to intervene.We can see that the current round of market debt conversion has significant progress in the place than the previous round of policy bonds.However,there are still many deficiencies and deficiencies in the market-oriented debt-to-equity system.For example,firstly,the local government GDP competition.Because the implementation of administrative actions should be around the economic assessment indicators,the local government is unavoidable to implement the local state-owned enterprises' debt-for-equity swap;Secondly,the guidance has a cross of the situation between "white list" and "blacklist" which was chosen by the enterprises.The selection criterion is also a bit fuzzy.This may lead to the government highly recommended local companies which the local debt is complexity,unclear,overcapacity,or the industry outlook uncertain to implement debt-to-equity swap by the reason of local employment,financial pressure and others.Local commercial banks,AMC asset management companies and other implementing agencies are still subject to local government interference in the conversion companies to choose or the debt-equity swap program to design.This may lead to local enterprises in order to enjoy this Dayton market debt conversion "free lunch ".In order to whitewash their own,the enterprise may be combined with the government to pack themselves,so as to achieve the implementation of institutions selected as debt-equity swap enterprises,the formation of " debt culture ".Thirdly,Banks are company capital risk provision regulation.The financial statements of the subsidiaries should be consolidated with commercial Banks,so the risk of commercial bank capital assessment will also be affected.The improper management of the management of the financial asset management company will lead to its participation in the corporate governance of the company.Fourthly,the withdrawal of the equity re-purchase through share repurchase to the future shareholding of the implementing institution conflicts with the provisions of the statutory share repurchase in the company law of China,and the legality is doubtful.Obviously,if all of these problems occur,the market-oriented debt-to-equityswap is only the "financial book game",only short-term to achieve lower corporate leverage,to help banks reduce the rate of failure.It cannot help business to achieve establishment of modern management mechanism,cannot achieve the reform of financial institutions within the governance mechanism,cannot achieve the purpose of accelerating the market clear.Therefore,reducing the financial system within the systemic risk will not be greatly realized,the market convertible bonds can only be called " Semi-market debt-to-equity swap."Thus,the author make the following suggestions: firstly,the government administrative action should be regulated.Such as weakening the government administrative intervention in debts into shares,deepening the concept of the government.Secondly,defining the selection standard of conversion company.Perfecting the "front list" and "negative list" standard of the market-oriented debt-to-equity swap,and set the standard of the total assets and the asset-liability ratio of the convertible enterprises.Thirdly,change the implementation of the management mechanism.It is suggested that the bank subsidiary companies should be formulated as the implementation rules of the venture capital to restore the management and management rights of the financial asset management companies.Fourthly,improve the exit mode of share repurchase.The author proposes to change the system idea of share repurchase,and regulate the source of share repurchase fund.In short,through the research and empirical analysis of the legal system of market-oriented debt-to-equity swap,it is helpful to promote the reform of China's economic and legal system and to promote the macro-control policies of the reform of the state supply side.The micro-level is to solve the current large-scale bad debt some reference.