Studies On The Legal Problems Of Debt-to-Equity Swap

Transforming Creditor's Right into shareholder's Right is the abbreviation that the creditor's right has been transformed into the Shareholder's right. Transforming Creditor's Right into shareholder's Right is an act of law and it can be divided into both commercially Transforming Creditor's Right into Shareholder's Right and Trans- forming Creditor's Right into Shareholder's Right in Policy. Its basic way is to sale bad asset of state-owned commercial bank to Asset Management Corporation (AMC), relatively, AMC as a shareholder participate or control these enterprise, when management condition become better. Then through the way of shares transfer or security market, AMC back Cash which they formerly input. Transferring the debts to shares is a significant reform to solve the problem of over-ridden debts in large and medium-sized state-owned Enterprises and to reduce the capital risk of commercial banks. On the basis of this environment, the scheme of debts-to-stock has been resented formally. Nevertheless, the performance of this scheme was not inflexible and infeasible during the past eight years. However, in the performance of D To E, it appear clash and conflict with the ongoing system, mechanism, view, law.My opinion is to improve and regulate by law in the course of debts-to-stock. Firstly, it is necessary to grasp debts-to-stock principle accurately and construct strict qualification system. Secondly, it is important to guarantee AMC to enterprise system can keep AMC's as shareholder control of D To E enterprise and improve continuously AMC's management level and efficiency. It is necessary to make special regulation about the duration periods and value of AMC's equity in legislation to sustain AMC benefit. Moreover, D to E also coordinates with state-owner's out-strategy and adjusts ownership through social and private cash input .These also help solve the problem of unclear state-owned ownership entity. At the same time, it is necessary to improve security market to widen the ways of share transfer to be outward transfer as main transfer way, to cultivate institutional investor and reform equity system. At last, it is important to define correctly government's role and play its role.