Legal Research On Equity Withdrawn Of Debt-to-equity Swap

In the past century,China has introduced debt-to-equity swaps.Academic and practical circles call it a "policy debt-to-equity swap" and it aimed to crack down on institutional factors——selected high-quality state-owned enterprises to reform and introduce external shareholders to improve the company's capital structure and corporate governance.The new round of debt-to-equity swaps that began in 2016 is "market-oriented debt-to-equity swaps" and its core logic lies in the cyclical factors that protect relatively high-quality companies in supply-side reforms.Debt-to-equity swap is a kind of policy policy mode of "exchanging time for space".The key to judging whether debt-to-equity swaps are successful or not depends on whether companies can emerge from the predicament and achieve profitability.On October 10,2016,the State Department promulgated the "Guiding Opinions on Shifting Debts of Marketized Banks to Equities"(hereinafter referred to as "opinions"),and made principle provisions on various conditions for the conversion of bank debts.To some extent,the promulgation of the “Opinions” has played a regulatory role in converting debt to equity,but for equity exit,the “Opinions”only provide guiding provisions.There are still many gaps in the system of equity exit from debt-to-equity swaps and many deficiencies and constraints in practice.This article is divided into four chapters: The first chapter is an overview ofdebt-to-equity swap exits.First,it discusses the concept of debt-to-equity conversion and the executor of implementation.At the same time,it gives a general introduction to the implementation mode of this round of debt-to-equity conversion.Then,I discuss the relevant issues concerning the exit mechanism of the government's debt swaps while the implications and reasons for the exit from debt-to-equity swaps.The implementation of the first round of debt-equity swaps is also introduced.The second chapter is about the exit mechanism of debt-to-equity stock rights--a study on the legal issues of equity transfer,and summarizes the problems existing in equity transfer in debt-to-equity projects.The third chapter is the study of the legal issues of equity repurchase.In this part,I summarize the characteristics of equity repurchase,legal risks,the effectiveness of the repurchase terms and the practical obstacles to equity repurchases.The fourth chapter puts forward some suggestions to improve the mechanism of equity withdrawal of China's current market-oriented debt-to-equity swap,and looks ahead the direction of the current round of debt-to-equity swap and the equity exit.The article believes that there are three ways of equity withdrawal including transfer,repurchase and listing.The above three methods have more or less certain deficiencies.In the case of equity transfer,only if the conversion company itself and the industry have potential for development,will new investors be willing to transfer the equity,and then the implementing agency will have the possibility to withdraw from the equity transfer.Due to limited liability,the company has the characteristics of human-capital,and its equity transfer is also limited by the company law;For share repurchase,regardless of the nature of the convertible enterprise,its acquisition of the company's own equity must be limited by the principle of capital maintenance in the company's legal theory.There are also a lot of disputes on sources of repurchase terms,repurchase prices and so on;As for the exit from the secondary market,the conditions for listing are harsh,which makes it difficult for the equity exit to be achieved in this way.This is the most important obstacle to the exit of debt-to-equity shareholders.The withdrawal of market-oriented debt-to-equity swaps should be based on theexperience of absorbing the first round of debt-to-equity swaps and further optimize the exit mechanism for debt-to-equity swaps.It is also necessary to combine actual conditions.In view of the problems existing in the withdrawal of debt-to-equity swap equity in the new stage,this paper puts forward several suggestions for improvement:improve the corporate governance structure and the profitability of the company;enhance the trading dynamism in China's multi-level equity trading market and increase the circulation efficiency of the proposed trading equity;improve the selection mechanism for share-changing companies to avoid the participation of zombie enterprises in debt-to-equity swaps;make suggestions on the specific systems for traditional equity exit models,and make use of the characteristics of preferred stock systems to achieve equity exits.In this way,not only will the distribution of dividends from debt-to-equity investors be prioritized Right,but also can receive fixed dividends,which is conducive to the recovery of bank principal and interest.In short,during the new round of advancement of debt-to-equity swaps,government departments and implementing agencies should learn lessons from the first round of debt-to-equity swaps,adhere to the principle of marketization,and choose suitable and efficient exit methods.The government's position should be to provide policy support and issue corresponding normative legal documents to ensure smooth implementation of this round of debt-to-equity swaps.