On The Difficulties And Countermeasures Of China’s Equity Transfer Guarantee

With the prosperity and development of the socialist market economy,traditional security rights have been unable to meet the economic needs of commercial entities seeking diversified financing channels.Equity transfer guarantees have emerged in China’s market transactions.It can reduce transaction costs,increase financing opportunities,and reduce the risk of falling debts.It has outstanding advantages in market transactions.It has become an important option for the realization of secured debts by transaction entities and is widely used in practice.However,there is a phenomenon of inconsistent judicial decisions regarding the determination of the effectiveness of equity transfer guarantees.In addition,due to the lack of clear guidelines for legal norms,the interests of security holders and other entities continue to conflict,and the path for creditors to realize their claims is not clear.The above problems,combined with specific cases and related theories of equity transfer guarantees,discuss the legal application dilemma of equity transfer guarantees,and analyze the causes behind their problems,in order to find corresponding solutions.Apart from "Introduction" and "Conclusion",this dissertation is divided into the following four parts:The first part outlines the equity transfer guarantee.Assignment guarantee is not a statutory form of guarantee.It is when the debtor occurs,the debtor or a third party transfers the ownership of the collateral to the creditor.After the debt period expires,the debtor pays off the debt and redeems it.The creditor may be compensated for the security.The equity transfer guarantee is based on the relationship of creditor’s rights and debts and the relationship of guarantees.The purpose of guaranteeing the realization of creditor’s rights is to take the ownership of equity as the legal appearance.Its main differences from equity transfers are: different basic legal relationships,different purposes for equity transfers,and different scopes of rights;its main differences from equity pledges are: whether ownership of equity is transferred,whether it has a publicity procedure,and whether it is possible to adopt debt preservation methods;The most essential difference from real stock debt is that the former is premised on the existence of creditor’s rights and debt relations,while the latter itself has disputes over "debt" or "shares",and the nature determination is a necessary link for judging real stock debt.The second part is the dilemma of law application of equity transfer guarantee in China.Through searching relevant cases,we can find that the courts in our country have inconsistent judgments on equity transfer guarantee disputes,that is,valid judgments and invalid judgments exist at the same time,and the judgments are based on different rules,including: "meaning is not true","illegal Principles of Statutory Real Right "," Prohibition of Avoidance of Liquidity Contracts "," Expression of Meaning Means " and " Mandatory Provisions Not to Violate the Law ".And through typical cases,we can see the sharp contradiction between the equity assignee(creditor)and the debtor,the target company and other third parties,namely the dispute over the validity of the equity transfer agreement,the dispute over shareholders’ rights and the dispute over bankruptcy claims;in addition,There is no reasonable and effective way to realize the secured creditor’s rights: on the one hand,whether the creditor enjoys the priority right to receive equity,whether it can directly obtain the equity of the target company,how to dispose of the equity,and how to protect the human nature of the limited liability company;On the one hand,due to the effect of the prohibition on liquidity,the court completely rejected the liquidation agreement between the parties.However,the compulsory liquidation methods such as auction and liquidation did not meet the parties’ original intention of reducing transaction costs.The third part is the main reason for the dilemma of the application of the equity transfer guarantee law in China.First of all,the lack of legislative level and theoretical disputes have led to the inconsistency of court rulings.On the one hand,China’s laws do not have express provisions for granting guarantees,and Article 24 of the Judicial Interpretation of Private Lending is also difficult to apply to equity transfers.And guarantees;on the other hand,the "invalidity theory" claims to belong to a false connotation of conspiracy,circumvents the prohibition of liquidity clauses,and violates the legal principles of property rights,while the "effectiveness theory" claims that the meaning is true,and no circumvention of liquidity clauses occurs.Second,the particularity of the equity transfer guarantee has led to conflicts of interest among multiple parties,and its particularity is specifically reflected in the particularity of the equity itself,the complexity of the multiple entities,and the people of the limited liability company.There are three aspects of coherence;in the end,the prohibition of liquidity contract has a certain effect on the realization of secured claims,making it difficult for the claims to be realized in the way expected by both parties.The fourth part is the countermeasures for the application of China’s equity transfer guarantee law.First of all,in view of the trend of diversified development of security,the code is in line with the functional requirements of transaction reality,and the surmountability of the disadvantages of security of transfer,our National Code can consider setting up a transfer guarantee in a single chapter of the security property right,and The concept,type,content,statutory liquidation method and liquidation process of the company shall be reasonably designed.And because of its particularity,equity transfer guarantees can only be made as basic provisions in the property rights code,and special provisions must be made in the Company Law and other relevant laws and regulations on its own characteristics.Secondly,in order to balance the conflicts of interest between multiple parties,,We should distinguish internal and external relations,give full consideration to the protection of the human nature of the limited liability company and the protection of the trust interests of other creditors of the bankrupt company;finally,the principle of debt settlement based on the principle of depletion of property and the principle of “fair priority and efficiency” To build a legal path for the realization of secured claims.