Research On Effectiveness Of Equity Transfer Guarantee

A cession security system is an atypical security that achieves the purpose of securing a debt by transferring the collateral to the creditor’s name.The three classical issues concerning the determination of the effectiveness of the cession security system: whether it violates the principle of legal rights in rem,whether it violates the clause of prohibition of flowing,and whether there is a conspiracy of false representation,have been controversial in academic circles since its emergence,and have not been able to form a unified adjudication idea in practical circles.After the promulgation of the Civil Code and Article 69 of the Interpretation of the Security System of the Civil Code,its contractual validity was basically recognized,but because the equity transfer guarantee is widely used in the financing method of limited liability companies,the special characteristics of the equity as the subject of the guarantee,with the characteristics of property and personal nature,involving more subjects of interest and more complex legal relationships,the relevant laws and judicial interpretations have not been able to make the discussion on the equity transfer The relevant laws and judicial interpretations have not been able to settle the discussion on the security system of equity transfer.After the effectiveness of the equity transfer guarantee agreement is recognized,the question of its effectiveness on other shareholders of the company,the company’s counterparties and other third parties arises.There are no perfect laws and regulations to refer to for these specific implementation problems,so this new type of guarantee still needs more supporting systems and legislative affirmation.There are many different theories on the theoretical doctrines of equity pledge,the most important of which are the ownership construction theory and the security right construction theory.The ownership construction theory advocates that the creditor obtains the full ownership of the secured claim,while the security right construction theory advocates that the creditor obtains the priority right of payment only within the scope of the security.The Supreme People’s Court adopted the latter view and proposed to apply the relevant provisions of equity pledge by reference.When discussing the issue of the effectiveness of the security of an equity transfer,a distinction must be made between the legal effects between the parties and the legal effects on external subjects.Internally,the relationship of equity transfer guarantee established by both parties based on the real guarantee purpose shall respect the autonomy of the parties’ intention on the premise that it does not violate the mandatory provisions of laws and regulations.Externally,on the basis of the theory of contractual relativity,combined with the principle of commercial appearance doctrine for the protection of reliance interests,the content of the protection of the rights of different external subjects is different.The identity of shareholders and the attribution of rights is the core of the discussion of the effectiveness of the equity transfer guarantee raised within the company,and must clarify the conflict between the Civil Code guarantee system and the company law regarding the definition of the identity and rights of shareholders,and combine the knowledge of other shareholders and the content of the agreement agreed by the parties to make a comprehensive judgment.The discussion of the effectiveness outside the company focuses on the responsibility and obligation of the shareholders,and the effectiveness of the equity transfer and guarantee agreement cannot bind the external subjects of the agreement,which leads to the discussion of the effectiveness of the equity transfer in the external transfer,bankruptcy and enforcement of the equity transfer and guarantee.Because of its inherent disadvantage of "means over ends",equity transfer guarantee puts the parties,especially the debtor,in a weaker position in terms of rights protection,but with its flexibility and convenience,it enhances the creditors’ incentive to provide loans and improves the efficiency of capital flow.Therefore,special provisions should be made for this new type of atypical guarantee,and a relevant system should be constructed to balance the conflicting rights and interests of the parties and external subjects,to provide a basis for judicial decisions,and to improve the adjudication path of the court hearing related cases.