Main Risks Of Equity Pledge Financing

Because of the particularity of equity assets, compared with fixed assets mortgage and pledge, third party guarantees, the risk of equity pledge financing is easy to be affected by factors such as the state of enterprise's operation and so on, mainly including the risk of stock value decline, moral hazard of equity pledge, equity disposal risk and legal risk caused by imperfect legal system.

Market risk under the fluctuation of equity value.

The quality of stock ownership is like the pfer of shares, and the pledge of the right to equip the stock holder means that the market risk of equity is taken from the pledgee.

The frequency and magnitude of stock price volatility are much larger than those of traditional assets used for guarantee.

Whether the equity risk of a hypothecation enterprise or other external factors, the final result is pferred to the price of equity.

When an enterprise is faced with business difficulties and fails to pay debts, the stock price will fall, and the proceeds from the pfer of shares will probably not be enough to pay off debts.

Although the law stipulates that the price after the price change is insufficient to repay the debt, the shortfall is still paid by the debtor.

However, due to the reality of small and medium-sized enterprises, the cost and benefit that the lenders continue to recover are often not directly proportional.

Moral hazard in the absence of credit for the pledgor.

The so-called moral hazard of equity pledge refers to the phenomenon that equity pledge may lead to "two times of money" and even tunneling of shareholders.

Because the value of shares depends on the value of the company and the value of equity is maintained, the pledgee needs to continue to evaluate the company, while the governance mechanism of the unlisted companies is relatively imperfect and the information disclosure is opaque. At the same time, as the third party Holdings Company is not the main body of contract, it is difficult for the pledgee to continuously track and control its production and operation, asset disposal and financial status, which will easily lead to the tunneling of Holdings Company assets and suspension of bank creditor's rights through related party pactions.

Legal risk caused by imperfect legal system.

The existing system of pledge of shares has many risks to the pledgee because of its many defects: first, the risk of the priority of the right of compensation.

The priority compensation right stipulated in the equity pledge system is different from that of the general security interest.

When the quality company goes bankrupt, the stockholder has no right of exemption from the pledge, because the value of the equity is close to zero when the company is bankrupt, and the right of profit distribution and the participation right of the company's affairs are of no value, so it is impossible to realize the pledge right.

The two is the risk of foreign equity defects.

China's foreign investment enterprise law stipulates that investors who are permitted to invest in foreign invested enterprises pay their capital contributions in accordance with the terms of the contract or in accordance with the law or approved by the investors after the establishment of the enterprises. The system of the authorized capital of the registered capital is implemented, that is, the acquisition of shares is not based on the capital contributions that have actually been paid, but the shareholders of foreign investment enterprises may set the pledge right with the shares of their non contributive shares and bring them to the pledgee.

。

Disposal risk under imperfect stock trading market.

In the equity pledge financing, if the enterprise can not return the financing funds normally, the disposal of the proceeds of the quality equity will become a guarantee for the creditors to be free from losses.

At present, although the property rights exchanges set up in different regions can carry out the pfer of shares of non-listed company, but because of the imperfections of the property rights trading market, most of the non-listed company equity pricing mechanism is difficult to form, and the shares are difficult to pfer freely.

The low value assessment will lead to the lack of more financing for the pledgor. The value assessment is too high and the right to hostage hostage will not be effectively protected. This also limits the scale of the equity pledge financing of SMEs.

(1) to strengthen the examination of the right to pledge.

In handling equity pledge financing, on the one hand, we should strictly examine the situation of the loan companies and the companies where the pledge shares are located.

We should fully analyze the company's management level, financial status, market competitiveness, prospects for development and the clarity of property rights. We should scientifically demonstrate the purpose of financing and investment projects, predict the borrowers' future solvency and the strength of equity pledge, and identify effective enterprises and valuable stock rights through effective review.

On the other hand, whether the review violates the restrictive provisions of equity pfer.

If a borrower is a shareholder of a company, whether the ownership of the shares is approved by a majority of all shareholders, if the borrower is one of the sponsors of the company, it shall examine whether the establishment of the company has expired for three years when the shares are set up.

(two) strengthen supervision over the quality company.

For equity pledge financing, it is not enough to supervise and restrict the solvency of loan units to control risks.

In order to guarantee the preservation and increment of the equity interest and prevent the moral hazard of the stock ownership, it is necessary to properly supervise and restrict the operation of the equity pledge units. It is also necessary for the financial institutions, the pledgor and the enterprises that have been invested in the stock ownership to jointly negotiate and sign the relevant contracts, improve the contract text, realize the continuous supervision over the management of small and medium-sized enterprises, improve the enthusiasm and initiative of bank lending, and further solve the problem of financing difficulties for small and medium-sized enterprises.

(three) perfect the correlation

。

In view of the lack of approval and registration of unified stockholder's rights supervision and management, it is suggested that the relevant functional departments of the state stipulate that the application for equity pledge must be examined and approved by the original company's examining and approving department, and the business administration department where the company registers its place shall exercise the functions of registration, supervision and management of equity pledge.

The banking regulatory authorities should study and formulate risk guidelines for equity pledge financing, standardize commercial bank's equity pledge financing business, and guide its scientific development.

In the realization of the right to pledge, when exercising the pledge right of financial equity, commercial banks should first examine the qualification of shareholders in order to ensure the rationality of the structure of shareholders of financial institutions and ensure the realization of the right of pledge.

(four) improve the stock pfer system of non-listed company.

Perfect non-listed company equity pfer

It is conducive to the development of equity pledge financing business.

Although all the property rights trading venues that have been set up around the world can carry out pactions related to equity pfer, it is still difficult to meet the demand for equity pfer.

It is suggested that the relevant departments of the state should formulate policies to support the pfer of the two level market of equity pfer as soon as possible, build and improve the market system, increase the liquidity and cash flow channels of corporate equity, allow all localities to establish and improve the property rights (equity) market and auction houses, clarify the procedures for the pfer of shares, and promote the normal pfer and flow of corporate equity under the unified supervision of the company's approval and registration management departments.

If the borrower fails to repay the bank loan as scheduled, the pledge bank can pfer the pledge equity through the above trading institutions for normal pfer, and create a favorable external environment for the bank to smoothly expand the new credit business of equity pledge financing.

Small and medium-sized enterprises will inevitably face external financing and make full use of their equity in pledge financing, which not only can save financing costs and reduce financing risks, but also fully recognize their equity value, while paying attention to preventing risks in equity financing process, so that a virtuous circle can be formed. Equity financing can also enhance its equity value. For SMEs, equity pledge financing is a good means of financing.