On The Protection Of Interests Of Corporate Bondholders

The Chinese economy is highly dependent on indirect financing. Our financial system is facing a structural imbalance, that is the high proportion of direct financing, with the direct financial developing slowly. In the current social financing structure, the indirect financial accounts for more than80%.Meanwhile, in the financial assets structure, bank deposits accounts for about70%. The risk is highly concentrated in the current situation of the banking system,which made the financial and the economy as a whole in high risk. Therefore, with the rising demand of direct financing through the capital market, debt financing instruments is increasingly becoming an important means of modern enterprise direct financing. The claims which bondholders have compared to the claims of other loans class are differrent.Their participation in the operation and the degree of governance constraints are more limited, the strength is weaker.Because most of them are individual investors, due to its dispersion, they need a more powerful protection mechanism. From the perspective of bondholders involved in corporate governance, this paper will discuss the bondholder protection of the interests of the corporate bonds in China.Compared to China’s bond market,the Bond markets of the developed Western countries is much more mature.The bondholder is not holding a risk-free fixed income, they also bear the investment risk. So how to protect the interests of the creditors in order to avoid risks is particularly important. Abroad studies have focused on the protection of the interests of the creditors the provision of indenture within the capital markets, and the focus of bondholders to participate in corporate governance and stressed self-protection to creditors. For example, in the mature bond market, the spirit of common law focused on the protection of the debt contract. The United States build the bond trustee system based on the theory of trusteeship,while the civil law focus on the involvement of bondholders in corporate governance, for example the establishment of the system of the creditors’ meeting represented by Germany. Both of them combined the legal protection and self-protection of bondholder organic.Regard to the interests of the bondholders protection system as early as2007the regulation issued by the China Securities Regulatory Commission. But its provisions in practice can hardly play the role of protection.This paper attempts to explore the rationality and practicality of the system construction on the basis of the existing models and the foreign bonds mature market legislation. The "financial sector development and reform"12th Five-Year Plan",issued by the government, guide that we should actively develop the bond market, bond market. Protection of the interests of bondholders trying to provide more effective protection and increase the vitality of the bond market.In addition to the introduction, the text is divided into three chapters:The first chapter will study the bondholders protection of the extra-territorial legal system. Within the study of two legal systems models, contrast of the bond trust and bondholders’ meeting,and introduction of related rule, my purpose is to find a reference to improve our bondholders protection system.The second chapter will introduce China’s current bondholders protection system and the legislative situation. The "Company Law" is to protect the interests of shareholders, to protect the Company as a whole, while the protection of bondholer is relatively scant. This section will describe the existing legal system and the protection of the interests of the bondholders practice situation, analyse of the problems of our existing system, the lack of system, and the practice of the conservation status of the company bondholders. Conclude, there are still large room for improvement in the legal system of protection of the interests of the bondholders.Chapter III will recommendate for our existing legal system of protection of the bondholders in order to be perfect. Also I will introduce the theory of corporate governance, to explore a possible combination of supervision and autonomy mode in order to effectively protect the interests of the bondholders of the company.