On The Exercise Of Shareholder’s Right In The Security Of Equity Transfer

With the birth of the corporate capital contribution system,the property value and exchange value of equity have been able to shine.In light of the cumbersome procedures for the creation of traditional security,the discounted nature of the security based on the passage of time,and the high cost of realizing the security,security of equity transfer has attracted attention in the financing market.Unlike traditional physical objects,equity has no physical attributes as an intangible and does not experience wear and tear discounting.The value of equity is only closely related to the production and operation of a company,and the market commonly uses the equity price to reflect the market value of company.In the context of company’s capital contribution system,equity still has a significant property value and exchange value even if the company’s registered capital is not paid up,as long as the company’s production and operating income are good.The security of equity transfer takes on a new life under the company capital contribution system.However,the identification of the shareholder and the exercise of shareholder’s rights under the security of equity transfer have become difficult issues in theory and practice.When the guarantor transfers the equity to the security right holder,the security right holder has acquired the equity from the commercial appearance and has the appearance of a fully legitimate shareholder,but within the company,the guarantor does not have the real intention to transfer the equity.Moreover,the equity interest has property attribute but also personal attribute.Whether the security right holder is accepted by the company and other shareholders within the company and whether he or she can exercise shareholder’s right in the company remains in uncertainty.When the legal relationship of external third parties is involved in the security of equity transfer,the absence of uniform legal rules leads to a great discretion of judges in specific case.Discretion can serve the function of substantive justice of law in specific trials,but discretion in specific case means uncertainty in transactions,and the dilemma of inconsistent scale of adjudication greatly hinders the development of cession guarantees in the financing market.There is a distinction between security right construction and ownership construction.Both existing legal regulations and judicial trials support the security right construction theory,which holds that the security right holder is not the shareholder of company.However,this view ignores the logical self-consistency between the ownership construction theory and the company law.This paper proposes that the ownership construction theory should be chosen in the security of equity transfer,and identify the shareholder under the corporate law,and in principle the security right holder enjoys the rights of shareholder,while if there is a agreement,the shareholder rights of the security right holder can be limited.When it comes to legal relations with external subjects,the security right holder needs to assume shareholder obligations,and the subject company can also intervene in the security of equity transfer.