The Research Of Law Problem In Financing By Pledge Of Share Right

As the development of the capital market and the deepening of shareholding reform of China, the right of shares becomes the object of pledge because it possesses the features of assets and circulation. The loan requiring a pledge of share rights provides great room for businesses or individuals to broaden their financing channels and the bank to develop its credit services .In reality, as a very important instrument, the pledge of share rights is used by businesses and individuals to finance especially when they are in demand of lots of money. On the other hand, because it is a new financing instrument there are many problems in the theoretical research and practice. In particular, the focus is on how to take precautions against the risks in financing by pledge of share rights.This article systematically studies the current regulation for the share pledge and points out the existing therein resu1ting from the regrets in legislation,offers proposals for legislative amendments,and gives the author's suggestions for avoiding the risks faced by the creditors in view of the high risk nature of a share pledge. The paper consists of the following four parts. The first part deals with the general knowledge of pledge of share rights, which includes the characteristics and guarantee function of the object of pledge of share rights. The second part focuses on the creation and the effect of a share pledge. The third part focuses on the risk of the pledge of shares which the commercial bank could face in stock collateral loans and then gives some measures against the risks. The six part puts forward some suggestions on how to improve the system of the pledge of some suggestions on how to improve the system of the pledge of shares.