On the status of Chinese legal system corporate bonds and Analysis

Paper Keywords: corporate bonds, corporate bonds institutional bondholders meeting of creditors

Abstract: For the production to raise operating funds, the need to expand production scale, the company can finance to achieve the purpose. With the continuous development and improvement of social and economic, in addition to banks and non-bank financial institutions, also through the issuance of shares or corporate bonds to raise capital and other forms in the development of China's corporate bond, its unique advantages of a large return on investment, making more and more people accept the same time, it also will be some drawbacks emerge.

First, the general legal system of corporate bonds

(A concept and types of corporate bonds

Corporate bonds, corporate bonds short, means that the company issued in accordance with legal procedures, agreed to debt securities in a certain period of time [1].

1 according to whether the bonds that hold the names of debt can be divided into bearer bonds and bearer bonds.
2 according to whether the bonds can be divided into credit guarantee corporate bonds (bonds and unsecured bonds secured.
3 if the holder to participate in the distribution of profits can also be divided into the company to participate in corporate bonds and corporate bonds.

The rest can be classified as revenue bonds, with the right credit quality corporate bonds, corporate bonds with new shares credit, readily converted into cash bonds, zero coupon bonds, hybrid debt, junk bonds.

(B) the legal characteristics of corporate bonds and significance

The main features of the company, including debt and legal aspects:

1 The company is the company issued a bond-type securities to,

2 bonds to raise production and management company for the purpose of funding a long term issue (more than 10 years of debt,

3 is a corporate bond issue for the majority of variable debt.
Issuance of corporate bonds increased the company's financing channels, with a broader and stronger financing capabilities, optimizing the company's debt structure at the same time does not affect returns to shareholders and the company's control.

Second, to protect the interests of bondholders

(A company the right to bondholders

1 interest claim

Enjoy the interest of the company's bondholders claim, interest, interest rate, duration of support methods and take delivery of bonds issued by the conditions determined.

(2) repayment claim

Bonds due date, the company should repay the principal to bondholders, should be in line with the agreed repayment of the principal methods and period, shall be arbitrarily changed, default in repayment of debts, the bonds also may be required to pay the bondholders.

(B bondholders protection system

Bondholders meeting system

Bondholders' meeting, also known as corporate debt creditors, bondholders exercised collectively by the right of temporary agency, not the company's organizational structure [2].

Bondholders meeting is a statutory temporary bonds by the same time the composition of the bondholders, the bondholders on matters of common interest of the autonomy resolution authority. Through meetings, bondholders can matters relating to their own interests, a common will to better safeguard their legitimate rights and interests of the company bonds are formed bondholders' meeting resolution may take corrective measures, to avoid disputes or collective with each of the bondholders were formed to solve individual problems trouble, you can put more energy into the production and operation of them.

Bondholders 'meeting as a representative of the interests of all bondholders in the event of the following bondholders' meeting should be held, usually include: ①'s capital reduction, merger, division, or into bankruptcy, reorganization proceedings, the company can not also by maturity The payment of interest, ② raise bond description of the agreement, commission administrator or guarantor, the collateral change of circumstances occurred, ③ other legitimate rights and interests of the bondholders significant impact on the occurrence of such matters.

In the event of the above issues, bondholders' meeting to be held, the need to meet the following conditions [3]:

① bondholders convened the commission manager or corporate bond issuance in the same time holding corporate bonds in companies with more than a certain percentage of bondholders convened,
② companies convene to issue bonds, Links to free download http://eng.hi138.com
③ need to meet bondholders' meeting convened by the relevant laws, regulations, or in accordance with the relevant general meeting of shareholders shall be dealt with

④ within a certain period before the date of the meeting by notice inform the holders the same time, this matter was held and the time, place,

⑤ meeting of the Bondholders and the costs of implementation of the resolutions issued by the company.

Third, the contemporary Chinese legislative evaluation of corporate bonds

1 In order to maintain financial order and stability and rapid economic, security and development, China has been the development of corporate bonds to take a strict management system [4], mainly in:
① The severe restrictions on issuance of bonds In 1994 the main effect of the original <<Law>> only allow stock companies, state-owned companies and more than two other state-owned enterprises or two or more state-owned investment entities set up a limited liability company was with the issuance of corporate bonds, the main qualification.

② In the bond approval process to implement a strict approval system [5], 1994 'Companies>> requirements, the Company issued bonds, the securities regulatory authorities shall submit for approval. <<Interim Measures on Management of convertible bonds>> require listed companies to issue convertible bonds shall be subject to the provincial people's government or the State Council department in charge of recommendation, reported to the Commission for approval.

③ on the issue of the standard conditions of strict limits .1994 <<Law>> provides for companies to issue bonds must meet five conditions in 2001, China Securities Regulatory Commission promulgated the <<listed companies to issue convertible bonds Implementation Measures>> and not be issued a six regulations apply in the case, the standard of the company to issue bonds for further restrictions.

In addition, China's current legislation and the relevant provisions of the corporate bonds also interest rates on corporate bonds, investment restrictions made a clear and concrete requirements.

(2) Although the 2006 implementation of the new <<Law>> and <<Securities Act>> has started to loosen up the regulation of corporate bonds, issuing company to cancel the qualification of the restrictions, change of corporate bonds issued by the examination and approval system for the approval of system, the abolition of restrictions on distribution lines and new <<Securities Act>> specified in the sponsor system and underwriting system, but in the corporate bond system of the legal system there are still some design flaws.

① In the corporate bond issuance is still using more administrative and legal restrictions, less market-oriented, corporate bonds will be more equivalent to government bonds, security funds as a key project construction, the main body is also more of a monopoly position basic industries,
② In the provisions of the guarantee system and lack of applicability in slightly lag, lack of predictability and the development of China's macro-understanding of corporate bonds. Guarantee form a single, effective security system is not the form of regulations,
③ In the interests of bondholders protection seriously, despite the implementation of the SFC in 2006 <<issuance of securities of listed companies management practices>> in the system provides a bondholders' meeting, but only for listed companies to issue convertible bonds due to the lack of legitimate rights and interests of bondholders protection system, in order to maintain social stability and security of financial order, can only transfer of corporate bond issuance and strict supervision, resulting in the development of corporate bonds difficult,
④ for our own financial system and security concerns, corporate bonds, private system does not allow the legal existence of the company in order to avoid legal sanctions to absorb funds, private equity phenomenon has become more subtle, difficult to effectively monitor the financial sector, is out of control against China caused a greater threat to financial security.

China's corporate bond issuance originally appeared in 1984, but until 2007 was officially formed in the corporate bond market, the slow development of the theory behind many of Improved corporate bonds, legislation, development of China's corporate bond market has become an important task, and sound, sound can broaden the company's corporate bond market financing channels, reducing the company's financial risk and increase investor choice of investment products, to promote the national economy, comprehensive and balanced development.

Fourth, improve the legal system of China's corporate bond Suggestions

For how to improve the legal system, corporate bonds, I have the following thought:

① relax corporate bond interest rate controls, attention to the characteristics of corporate bonds, corporate bonds in the development of the legal system, should pay attention to corporate bonds and equities, financial bonds, the difference between government bonds. Listing of corporate bonds, underwriting systems, information disclosure system, security system, shall be considered the independence of corporate bonds [6].

② adhere to the socialist market economy to reduce the administrative restrictions on corporate bonds and legal limits, re-designed regulatory system of corporate bonds.

③ improve the corporate bond trading system, and vigorously promote the development of institutional investors to give priority to corporate bond trading system.

④ the establishment and improvement of management systems and corporate bonds issued subject of self-restraint mechanism, so that intermediaries and investors to participate in the supervision of corporate bonds, corporate bonds, credit and improve the responsibility system.

Improve the legal system, corporate bonds, not only the need for the rule of law, but also the issuer of corporate bonds, holding a strong safeguard the legitimate rights and interests. China's corporate bond market development is very slow, raise production and management of the company's capital, broaden financing channel obstruction is not small in the improvement of the legal system of corporate bonds still struggling to move forward on the road.


[1] Shi Tiantao. Law on the [M]. Beijing: Law Press, 2006, P201-203.

[2] Lei Xinghu.'s Law [M]. Beijing: Beijing University Press, 2006, P267.

[3] Shi Huirong, Shiji Hu. Law [M]. Beijing: China Renmin University Press, 2008, P112-113.

[4] Yang Chunping the Chinese Company Law Outline of Theory and Practice [M]. Beijing: China University of Political Science Press, 2007, P196-208.

[5] Xiaoxiong Wei, China's development of corporate bond [J]. Financial Management and Research, 2008 (05
[6] Zhang, Zhang Di, China's development of corporate bond status and countermeasures [J]. Economics and Management, 2009 (Volume 02, P55-58. Links to free download http://www.hi138 . com

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