| The development of China’s bond market started relatively late.Enterprises were allowed to issue bonds for financing from the 1980 s.At that time,the bond market was highly administrative,and bond issuance was subject to an approval system.Since that investors bought bonds "with eyes closing",the financing function was insufficient,it could not be regarded as a real bond market.In 2014,the "11 Shanghai Chao-ri Solar Bond" default ended the long-term "rigid payment" phenomenon,and opened the prelude to the market-oriented default of credit bonds;almost at the same time,China’s bond markets began to carry out the exploration of the registration reform,comprehensively carry out system construction in various aspects such as bond issuance approval,investor protection,intermediary supervision,credit risk management,default disposal mechanism,etc,which has greatly promoted the marketization,legalization and internationalization of China’s bond market.The revised securities law,which was officially implemented on March 1,2020,clarifies that China’s bond market fully implements the registration system.After summarizing the experience in the exploration of market-oriented reforms in the past few years,it further clarified that the bondholders’ meeting system and the indenture trustee play the fundamental role of investor protection in bond market.Looking back at the rapid reform and development of China’s bond market in the past few years,it is found that the protection of bondholders’ rights and interests is the most prominent problem,and it is also the key to whether China’s bond market can be improved and successfully moved to a higher level,fully exert its investment and financing functions,and attract foreign capital.The issue of protecting the rights and interests of bondholders is prominent in bond default cases.Since China’s bond defaults only occur on corporate bonds,government bonds,policy financial bonds and other types of bonds issued by financial institutions have never defaulted,and they will still maintain a state of zero default in the foreseeable future.Thus,the research object of this paper is only the issue of holder protection in "corporate bonds".In recent years,China’s bond defaults have gradually become normalized.According to Wind data,as of the end of May 2022,the default rate in China’s bond market is0.79%,and the outstanding amount of default exceeded 200 billion.From the perspective of default disposal,China’s bond default disposal methods are single and the recovery rate is low.As of the end of 2020,among the 88 defaulted public bond issuers that have determined(or proposed)default disposal methods,53 defaulted issuers have adopted bankruptcy litigation for default disposal,and the recovery rate of bankruptcy litigation is only 0.12%,which is lower than the overall level of the public bond market(14.84%).1 The situation revealed that there were some prominent contradictions in the current legal system for the protection of the rights and interests of bondholders in China.Under the long-term inertial thinking of "stocks are more important than bonds",the construction of the legal system for the protection of bondholders in China is far behind that of bonds.The development of the market itself and the shortcomings of the bondholder protection system have in turn caused serious constraints to the sustainable and healthy development of the bond market.Therefore,the construction level of the protection system for corporate bondholders in China has become a key issue on the high-quality development of bond market.The first chapter clarifies the basic concepts of this study and raises questions.The first chapter is about the meaning of bond default risk.At present,there is no clear definition of bond default in any official documents in China.Therefore,there are different understandings of bond default risk in theory and practice.After sorting out and summarizing,this paper believes that the differences in views on bond defaults are not fundamental differences in the understanding of the nature of bond defaults,but the value choices of different subjects based on their own positioning and interest demands.Regarding the connotation of "governance",by examining the background and representative viewpoints of western governance theories,as well as the governance connotation in the context of national and financial risk governance,this paper summarizes several essential understandings of the governance connotation.The first is the main body of governance.The second is to balance the power of governance subjects,and the third is to build a behavioral incentive,restraint and accountability mechanism.The research and construction of the legal system of bond default risk governance in the following paragraphs are also carried out according to this logic.Secondly,this paper sorts out the institutional framework of bond default risk governance contained in securities law.In terms of the vertical governance system,the securities law clarifies that the securities regulatory department is the main body of market risk prevention,resolution and disposal;in the horizontal specific system.The Securities Law clarifies the bond information disclosure system,the holders’ meeting system,the trustee system and the intermediary "gatekeeper" system.In a nutshell,the securities law contains a bond default risk governance framework dominated by the securities supervision and management department and supplemented by the bond information disclosure system,the holder’s meeting system,the trustee system and the intermediary gatekeeper system.However,looking at the essential connotation of "governance",the framework set by China’s securities law overemphasizes administrative power,does not pay enough attention to the governance power of market players,and does not play enough market-oriented incentive and restraint mechanisms.There are defects in the concept and system construction of default risk governance,resulting in the unsatisfactory effect of bond default risk governance in my country.The bond information disclosure system,the holder meeting system,the trustee system and the intermediary gatekeeper system are the keys to the governance of bond default risk.These four systems should be corrected according to the needs of bond default risk governance,and then rationalized on this basis.A good logical relationship between the four systems,so that they return to the system standard,cooperate with each other and coordinate organically,and realize the organic integration of various systems can not only enhance the rationality of the behavior of the governing body,but also reduce the bond default risk governance process.Therefore,the efficiency of risk management can be improved and the stable and healthy development of the bond market can be achieved.Thirdly,it further puts forward the core problems of the current bond default risk governance in China—over-reliance on administrative power,as well as the legal defects of the four systems themselves.The following sections will follow the specific improvement of the four systems from the perspective of bond default risk governance.Research in depth.The second chapter studies the information disclosure system in bond default risk management.The legalization of risk governance is to use risk governance rules to standardize risk governance behaviors,make them more standardized,stable and normalized,and form a sustainable and effective risk governance order.Among them,neither party can monopolize risk information or conceal risk information.From the perspective of the financial risk generation mechanism,information has the effect of risk governance.However,under the efficient market theory,there are fundamental differences between bond information disclosure and stock information disclosure.First,the effect of bond information disclosure on the issuer’s credit assets is limited.There is a delay in the response to risk information.Therefore,in order for the bond information disclosure system to truly exert the effectiveness of default risk governance,the bond information disclosure system should be improved in accordance with the characteristics of bonds.Judging from the actual inspection of the bond information disclosure system,the current risk governance efficiency of bond information disclosure is insufficient.First,the standardization of information disclosure of risky and default bonds is much lower than that of normal bonds.There are many and frequent major events in bond prices,and regular disclosure of information such as regular reports is difficult to meet investors’ information needs.Exploring the root of the system is mainly due to the insufficient response of the information disclosure system that fits the risk characteristics of bonds,which is manifested in the blank of active voluntary disclosure rules,the lack of risk-specific disclosure rules,and the rough disclosure rules of risk disclosure.As a result,bond issuers lack the motivation to actively and voluntarily disclose when there are signs of default risk.At the same time,from the perspective of regulatory constraints,the disclosure of the content required by the rules is not enough to reveal the bond default risk,and the evolution of the bond default risk is not disclosed in a timely manner.The information disclosure system of overseas high-yield bonds is worth learning from the fact that the arrangement between creditors,liquidity and solvency indicators are relatively important in bond information disclosure.Regarding the specific improvement suggestions for information disclosure,firstly,clarify the voluntary information disclosure requirements of bond issuers,improve the voluntary information disclosure system in a market-oriented manner,establish the orientation of investors’ needs,and truly make use of the information disclosure system to serve investors The second is to build an information disclosure rule system that fits the characteristics of bond risks,and build bond information disclosure requirements with solvency as the core.It is recommended to use a combination of qualitative and quantitative methods for information disclosure requirements.The third chapter studies the holder meeting system in bond default risk management.The bondholders’ meeting is a collective discussion platform for all bondholders in the same period,and the resolutions of the bondholders’ meeting represent the collective consensus of bondholders.Bondholders are the subject of rights and play a central role in the governance of default risk of bonds.Their cognition and evaluation of default risk and the right relief path they choose in turn determine the development trend of default risk governance.This chapter starts with the legal basis of bondholders’ participation in bond default risk governance.However,bondholders,as business entities,have different rights status than ordinary civil creditor-debt relationships,and bondholders’ rights protection is not absolute.Rather,it is necessary to carry out appropriate transfer of rights under the constraints of the value orientation of commercial law efficiency and the basic principle of fair trade.The enjoyment and proper transfer of rights are the basic logic of bondholders’ actions in the process of bond default risk management.From the perspective of risk governance,the bondholders’ meeting is a fundamental system in the bond market that strengthens the status of bondholders as the subject of their rights and unifies the position of bondholders.Special institutional arrangements,therefore,the bondholders’ meeting system is the institutional realization of the bondholders’ participation in bond default risk management.From the actual effect of the operation of the bondholders’ meeting system in China,the concentrated manifestation of the failure of the holders’ meeting is that the validity of the resolutions of the holders’ meeting is in a state of high uncertainty.In terms of internal effectiveness,the issuer has room to "manipulate" the rule-making and decision-making process of the bondholders’ meeting.The issuer may communicate with some holders privately and satisfy the interest demands of specific holders,thereby ensuring the holding of bondholders.In this case,the resolutions of the bondholders’ meeting cannot represent the collective will of all bondholders,and there is no institutional restriction on how the rights of a few dissenting holders can be guaranteed.In terms of external effectiveness,the effectiveness of the resolutions of the holders’ meeting under complete "contract autonomy" is highly uncertain.The root cause of the failure of the bondholders’ meeting in China is that,first,there is a natural contradiction between the collective agency model of the bondholders’ meeting and the realization of the individual rights of a single holder.There are obvious differences in internal interest demands,and it is difficult to form a high degree of unity,and there is always a problem of rights protection of minority holders who disagree with the resolutions of the bondholders’ meeting.Second,there is a weak basic obstacle for the holder to claim the right to claim externally.Based on the principle of relativity of contractual obligations,only the bondholder can obtain legal protection by claiming the right to claim the contractual counter-party on matters within the scope of the contract.The validity of the resolutions of the holders’ meeting essentially depends on whether the legal basis of the bondholders’ claim to the outside world is sufficient.Third,there is a lack of internal information exchange and interest coordination mechanism among holders.Sufficient and effective communication and coordination are the prerequisites for collective discussions.However,the current bondholders meeting system lacks institutional arrangements for communication and coordination among bondholders.As a result,the situation that often occurs in practice is that before holding a holder meeting,issuers usually communicate with investors privately,and investors lack an effective communication mechanism to unify their rights protection demands.Fourth,there is insufficient supply of relevant legal systems for holders’ meetings,such as special relief for minority dissident holders,substantial and fair guarantees for the operation of holders’ meetings,and lack of institutional supply for bondholders’ participation in corporate governance and other issues.After comparative research outside the territory,the improvement direction of my country’s bondholders’ meeting is put forward.First,the value choice of the bondholders’ meeting system should be clarified at the securities law level,that is,based on the "commercial law fairness principle",the holders’ rights should be appropriately transferred,and economic efficiency should be given priority.The second is to clarify the action rules for a small number of dissenting holders to file lawsuits alone.The third is to strengthen the system supply of information exchange and interest coordination among holders.The fourth is to draw on overseas experience to introduce a consent collection system and make a good connection with the holders’ meeting.The fourth chapter studies the trustee system in bond default risk management.Due to the relative weakness of bondholders in information acquisition and collective action,it is difficult for them to make timely decisions and take active actions in the governance of bond default risks.The governance power of market entities in bond default risk is unbalanced.The legal system expects the trustee to give full play to its professional advantages to make up for the relative weakness of bondholders in default risk management as much as possible,and strengthen the risk management ability of bondholders,so as to achieve the participation of all parties in the governance of bond default risk.Judging from the operational effectiveness of the trustee system,the trustee plays more of a passive agent role in the process of bond default risk governance.Any rights protection actions of individuals require the collective authorization of bondholders.In the process,there is often a conflict between the collective rights protection actions represented by the trustee and the individual rights protection actions of bondholders who are not authorized.The many problems faced by bond trustees in practice are,in the final analysis,the defects of system construction.The main problem in the actual operation of the bond trustee system is that the legal positioning is still unclear,resulting in an unbalanced allocation of powers and responsibilities of the trustee’s "light power and heavy responsibilities".As a management agency for the collective interests of bondholders,it can play a very limited role in protecting the rights and interests of bondholders,especially in the stage of right relief in default disposal.It has to make some "superficial efforts" to prove that it has been diligent and conscientious,resulting in less than ideal effectiveness of the trustee system.By learning from the legislative experience of overseas bond trustees,this paper puts forward suggestions for improving my country’s bond trustee system.One is to build a trustee system based on the Trust Law,the other is to refine the qualification requirements for trustees,and the third is to balance the allocation of rights and obligations of the trustee,the fourth is to clarify the accountability mechanism of the trustee.The fifth chapter studies the intermediary "gatekeeper" system in bond default risk governance.Due to the relative weakness of bondholders in terms of information acquisition,it is difficult for them to make timely decisions and judgments in bond default risk governance.The governance power of market players in bond default risk is unbalanced.Among them,underwriting,auditing institutions and lawyers improve their ability to identify market information,and rating agencies strengthen the market’s ability to evaluate risk information.Judging from the practical cases of bond defaults,the intermediary agencies have the problem of failure to play the role of "gatekeeper" to varying degrees,which leads to the dereliction of the quality of information in the bond market,and further causes the market parties to make mistakes in the evaluation of the credit risk inherent in the bond.It is difficult to make correct default risk management decisions.Among them,the administrative penalty by the regulatory authorities and the judgment of the court are not clear about the identification and division of the responsibility of the "gatekeeper" of the intermediary agency.There are differences in the determination standards,and there are also differences in the determination standards of intermediary agencies in different cases in judicial judgments.Therefore,the current legal system in China is poisonous with the imbalance in the allocation of responsibilities among bond intermediaries,which makes it difficult to fully motivate and mobilize the professional ability and enthusiasm of each intermediary agency to perform their duties.The root cause of the failure of the market information screening mechanism is that,in addition,the core carrier of the "gatekeeper" function is "reputation capital",while the marketization of China’s bond market started late,intermediaries are immature,and reputation constraints have not yet been formed.An important reason for the failure of the "gatekeeper" of the bond market.There are mainly two modes for the division of responsibilities of intermediaries abroad.One is the sponsor-led responsibility model,and the second is the differentiated responsibility model.Combined with the actual development of China’s bond market,in terms of improving the "gatekeeper" system,it is recommended to abandon the "sponsor agency-led" thinking that has been inherited from the stock market,and each intermediary agency should be responsible for the division of labor according to their professional fields,avoid duplication of labor,and allow All intermediaries focus on their own work and guide them to fulfill their responsibilities within their respective professional fields to stimulate the enthusiasm of all parties;second,the regulatory authorities have issued due diligence guidelines for bond intermediaries,which are detailed and diligent according to industry characteristics and risk points.The requirements of due diligence will further clarify the responsibility boundaries of intermediaries.The third is to promote the formation of market constraints on ratings under the access filing system.Under the filing system,the entry threshold of rating agencies is lowered,which objectively puts forward higher requirements for rating agencies’ interim and ex-post supervision.On the one hand,we should speed up the improvement of the rating regulatory rules system,further clarify and refine the rating business procedures,information disclosure and independence and other professional requirements,improve the penalties for violations,and give full play to the "hard" restraint role of supervision.On the other hand,we must guide the industry.Establish a screening mechanism oriented by professional ability,accumulate surplus capital,form a healthy competition environment for the survival of the fittest,and give play to the "soft" restraint role of the market. |
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