The Research Of Conversion Right Of Convertible Bond Holders

Convertible corporate bonds is relatively mature securities in the overseas market. In our country, the number of the issued Convertible corporate bonds in recent years is also increasing.Convertible corporate bonds provides a new way of financing for the company.Investors will have more investment choices.Convertible corporate bonds is adapted to the policy of varieties and diversification, promoting the asset securitization and the reform of offinancial system, so convertible corporate bonds will obtain further development in China’s capital market.Conversion is the most important features of convertible corporate bonds,and is its core value.The conversion of convertible corporate bonds are embodied in the conversion right of bondholders, which is the most important right of the holders, as well as the most important reason of theirs investment.Investors return on investment are mainly achieved by the right to convert.Convertible corporate bonds’ interest rates are lower than normal bonds.Sometimes the rates is even near zero.So the main value of convertible corporate bonds is not to request the company to return the principal and interest,but to gain the right to convert and gain the potential value of equity.Conversion rights ’ realization, is also accord with the expection of the distribution companies,which can help the company to improve financial structure, and transform failure would bring huge repayment pressure to the company.So the debt-to-equity swap is the common goal of both sides.However,the related legal system of conversion rights in China is still not perfect,lacking in interoperability,and there are many legal blank.The imperfection of the conversion right system,has greatly weakened the attraction to investors,and damage the development of convertible corporate bonds.This paper is divided into three parts:The first part is the basic theory of convertible bonds holders ’ conversion rights.Firstly this part expounds the concept and the most important characteristics of convertiblecorporate bonds, namely the conversion.And then analyze the relationship between the conversion rights and other rights of bondholders,put forward that the conversion rights is the most important and core right of convertible bond holders and highlight its importance.At the same time,expounds the necessity of perfecting the conversion right system from two angle,that is the convertible bondholders and the issuing company.The second part is the main problems of convertible bondholders’ convertible right system.This part put forward several main problems that exist in the conversion right system through analyzing the current situation of conversion right system in our country,including the lack of the convertible bondholders’ basic right- the right to know,the imperfection of the conversion price adjustment mechanism, convertible right is limited by issuing company’redemption right, the perfection of the bondholders’ group protection system,and the lack of conversion rights protection in specific situations,etc.The third part is the perfection of the bondholders’ convertible right system.Firstly this part put forward that we should perfect the system of the right to know,which is the premise of the right to convert,through two ways,that is improving the issuing company information disclosure system and giving bondholders the right to consult,to fully guarantee the right to know.Second,improve the conversion price adjustment mechanism,including anti-dilution provisions and terms of downward revisions.Third,improve the system of redemption,avoid that foreclosures cause severe damage to conversion right.Fourth,improve the system of bondholders group protection,and stated the important role of the combination of convertible bonds trust system and bondholders meeting in perfecting the conversion rights system.Finally,conversion rights protection in the special case are expounded.