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There are certain difficulties in enterprise financing. In the market, it is a common financing behavior for shareholders to pledge their equity. Equity pledge is a way of guarantee, that is, to guarantee the performance of debt. The debtor or a third party pledges its equity to the creditor according to law. If the debtor fails to perform his debt or the situation of realizing the pledge agreed by the parties occurs, the creditor has the right to receive priority compensation for the equity. The "equity" here includes not only the shareholders' contributions of limited liability companies, but also the listed or unlisted shares of joint stock limited companies. This article will outline the establishment of equity pledge and common problems.

I. establishment of equity pledge

1. Effective elements of equity pledge

According to the first paragraph of article 443 of the civil code, "if the fund units and equity are pledged, the pledge right shall be established when the pledge registration is handled. "According to the provisions of the regulation, whether listed companies or non listed companies, equity pledge takes registration as the effective element.

For the state-owned shares of listed companies, the transfer or pledge of state-owned shares should be approved by the state-owned assets supervision department or other institutions.

In case of pledge of state-owned shares, the authorized representative unit of the state-owned shareholders shall, after the signing of the pledge agreement, report to the competent financial authority at or above the provincial level for the record according to the financial subordination relationship, and go through the registration procedures of pledge of state-owned shares at the securities registration and clearing company according to the registration form of pledge of state-owned shares of listed companies issued by the competent financial authority at or above the provincial level.

Notice of the Ministry of Finance on issues related to the pledge of state owned shares of listed companies issued by the Ministry of Finance in 2001

2 registration authority

For limited liability companies and unlisted joint stock limited companies, the registration authority of equity pledge is the administrative department for Industry and commerce, while the listed company is China Securities Depository and Clearing Corporation Limited.

China Securities Depository and Clearing Co., Ltd. is a non-profit enterprise legal person established in accordance with the company law of the people's Republic of China and the securities law of the people's Republic of China. Shanghai and Shenzhen stock exchanges hold 50% of the shares of the company respectively. Since October 1st, 2001, all the securities registration and settlement businesses undertaken by Shanghai and Shenzhen stock exchanges have been transferred to China Clearing, and the national centralized and unified securities registration and settlement system stipulated in the securities law has been formed.

3 scope of guarantee

The principal creditor's rights and interests, liquidated damages, damages, storage costs of the pledged property and the costs of realizing the pledge, as well as the fruits generated by the pledged property. If the pledge contract provides otherwise, such agreement shall prevail.

4. Realization of pledge

Realization of agreement: the pledgee shall negotiate with the pledgor to transfer and realize the pledge in the form of discount, auction or sale according to law, and the pledgee shall have priority to be compensated for the proceeds.

Litigation realization: if the pledgor refuses or cannot negotiate, the pledgee has the right to bring a lawsuit to the court to realize the pledge.

(the picture is quoted from the network)

II. Common problems of equity pledge

1. The pledged equity should be transferable

The pledged equity shall be transferable.

Article 440 of the civil code, the following rights that the debtor or a third party has the right to dispose of may be pledged: (4) transferable fund units and equity;

2. The company law clearly stipulates several types of equity that cannot be pledged

1 Non transferable equity. For example, Article 141 of the company law stipulates that "the shares of the company held by the promoters shall not be transferred within one year from the date of establishment of the company. The shares issued before the company's public offering of shares shall not be transferred within one year from the date of listing and trading of the company's shares on the stock exchange." The company's shares held by the promoters of a joint stock limited company cannot be transferred, and the pledge of shares enjoyed by the pledgee is difficult to realize, so the pledge of equity should be limited.

2 Equity held by directors, supervisors and senior officers of a joint stock limited company. Article 141 of the company law stipulates: "The directors, supervisors and senior managers of the company shall report to the company their shares held in the company and their changes. During their term of office, the shares transferred each year shall not exceed 25% of the total shares of the company held by them; the shares of the company held by them shall not be transferred within one year from the date of listing and trading of the company's shares. The above-mentioned personnel shall not transfer their shares of the company held by them within half a year after their resignation. The articles of association may Make other restrictive provisions on the transfer of the shares of the company held by the directors, supervisors and senior managers of the company. " Similarly, under the above restrictions, the non transferable part of the company's shares held by the directors, supervisors and senior officers of a joint stock limited company shall not be pledged.

3A joint stock limited company shall not accept the shares of the company as the subject matter of the pledge. This is clearly stipulated in Article 142 of Chapter V "issuance and transfer of shares of a joint stock limited company" of the company law. Therefore, it should be noted that: the company law stipulates that joint stock limited companies shall not accept the shares of the company as the subject matter of the pledge.

3. Whether the fluid clause is valid

The so-called liquid clause means that before the expiration of the debt performance period, the pledgee and the pledgor agree that when the debtor fails to perform the due debt, the pledged property belongs to the creditor.

According to the property law, the security law and their judicial interpretation, the terms of liquid pledge and pledge are invalid. The reason why the law prohibits the liquid pledge contract is that the debtor is often in a dilemma when borrowing. The creditor can take advantage of the debtor's disadvantage and its strong position to force the debtor to sign a liquid pledge contract with it, guarantee the small amount of creditor's rights with the pledge of high value, and obtain the ownership of the pledge when the debtor cannot repay the debt, so as to seek improper interests. In order to protect the legitimate interests of the pledgor, the law prohibits liquid pledge contracts. However, after the promulgation of the civil code, it is stipulated that although the security interest holder cannot directly obtain the ownership of the collateral, he can auction and sell the collateral and have priority to be compensated for the proceeds.

Article 428 of the civil code, if the pledgee agrees with the pledgor that the pledged property belongs to the creditor when the debtor fails to perform the due debt before the expiration of the debt performance period, he can only have priority in repayment of the pledged property according to law.

4 consideration in case of disputes during implementation

Generally speaking, the repeated pledge of equity refers to that after the shareholders of the company pledge their equity to the creditors, they pledge their pledged equity again to the original creditors or other creditors in order to guarantee the performance of other debts. This concept is not clearly stipulated in the property law, security law, company law and other laws, and these upper laws do not clearly stipulate whether equity can be repeatedly pledged. In addition, the measures for the registration of equity pledge of administrative departments for Industry and Commerce promulgated by the State Administration of market supervision and administration did not stipulate or explicitly prohibit the repeated pledge of equity.

In practice, the local industry and Commerce Department has issued regulations that do not allow the repeated pledge of equity and cannot handle the registration of equity pledge. The author believes that this regulation violates the legal principle of property rights. Of course, since the establishment of equity pledge takes registration as the effective element, from the perspective of practical operation, whether to handle the repeated pledge of equity also depends on the provisions of the local industrial and commercial department and the operation practice of the local industrial and commercial department.

Therefore, it is recommended that the parties concerned communicate and confirm with the local industrial and commercial department before handling the equity pledge, so as to avoid the situation that the pledge is not allowed, which leads to the inability to handle the equity pledge registration.

III. lawyer's suggestion

In the practical operation of equity pledge registration, it is suggested that the pledgee should first pay attention to whether the underlying equity is not transferable; At the same time, the Pledgee of defective equity should also be carefully considered (the defective equity can also establish the pledge, and the corresponding risks will be discussed in the subsequent series of articles). It can be considered to require the pledgor to issue supporting documents such as capital contribution certificates to ensure that its equity has been paid in, and do a full due diligence (such as industrial and commercial search, etc.). The local industrial and commercial departments should also pay attention to the restrictions on which equity cannot be pledged. It is suggested to verify with the local industrial and commercial departments in advance to avoid the situation that equity cannot be pledged, which leads to the failure to register equity pledge.