The Discussion Aboutsupervision Of Chinese Exchangeable Bonds'application In Reduction

In order to enrich reducing and financing means of quoted company,exchangeable bonds(EB)which haveexchanging-share option attached toemerge as the times require.Compared with convertible bonds(CB),the issuer of EB are not listed companys but shareholders of a listed company.The shares which are exchanged have already existed.The total number of shares of the listed company will not be added,and the shares of the remaining shareholders will not be diluted.So EB are connected to the reduction of the share of the listed company since EB are introduced into Chinese capital market.In order to maintaining a stable and healthy development of the capital market in the long run after stock market crash in 2015.China Securities Regulatory Commission(CSRC)begins to pay attention to the supervision of shareholders' reduction in Listed Companies and promulgate regulatory documents successively.But it doesn't bring EB into supervision as a way of reduction until CSRC promulgating new regulations of reduction on 27/5/2017.“5.27 CSRC new regulations of reduction”still has some problems such asdetailed rules promulgated by SSE is different from new regulations of reduction promulgated by CSCR and itonly has principled provisions,and the applicable rules are not clear.By the end of 2017,it failed to achievethe expected regulatory effect.This paper starts from combing the development history of exchangeable bonds and reduction supervision,then using comparative analysis to discuss difference between “5.27 CSRC new regulations of reduction” and detailed rules promulgated by SSE.Secondly this paper comparative analyses the current situation of supervision and the effect of supervision to discuss similarities between classification standards for EB and classification standards for reduction trading mode.Finally on the basis of the above discussion,this paper concludes in putting forward the pertinent supervision suggestions.The main contents of this paper are as follows:The first part is to briefly introduce EB such as the basic concept of exchangeable bonds,the motivation of the convertible bonds,the main regulatory system of exchangeable bonds,and so on.The second part summarizes the new regulation about share reduction issued in May 27 th,2017and the applicability of exchangeable bonds as a way of reduction.Then,this paper put forward problems of “5.27 CSRC new regulations of reduction” such as unclarities of restricted objects,diffrence between detailed rules,and so on.The third part is problem explanation and suggestion.Firstly for the problem of unclarities of restricted objects,it uses teleological method of legal interpretation to discuss and comes to conclusion that both issuers and investors of EB should be included in the scope of supervision of reduction.Then for the problem of the unclarities of detailed rules,this paper use case analysis,system interpretation and other methodsto discuss,it come to the conclusion that investors and issuers of three kinds of EBclassificated according to the way of issuance,the scope of the investor,and the pricing method of EB shall apply the rules for reducing of the new regulations respectively.The fourth part is puttingforward suggestions for improvements in the regulation of reduction and the approach to EB like perfecting the information disclosure mechanism,improve administrative penalties for violations,strengthen criminalpunishment measures properly,improve civil dispute settlement mechanisms and compensation standards.Finally,the conclusion is summed up and the limitations of this paper are pointed out.