The nature of paying debts with shares

"Paying debts by shares" (including "paying debts by shares") is essentially a transaction and a civil legal act of both parties, which requires the consent of both parties. As long as it does not violate the provisions of laws and regulations and does not harm the interests of the state, the collective and others, it is effective and protected by law. So there is no need to "pilot" at all. The so-called "pilot project" is suspected of creating "rent-seeking" opportunities, which has no basis in the law and is the improper intervention of the government in specific economic activities.

According to the nature of "paying debts by shares", the scheme of "paying debts by shares" or "repurchasing debts by shares" can be put forward by the board of directors of listed companies, or by the controlling shareholders and other related parties who encroach on the funds of listed companies. After the two parties reach an agreement through consultation, it will take effect after being approved by the shareholders' meeting of the listed company and the competent authority of the controlling shareholder, such as SASAC. Moreover, in the implementation of debt-for-equity swap, all parties concerned must "disclose relevant information in a timely, complete and accurate manner, implement the obligation to inform creditors in the Company Law, and ensure that all stakeholders voluntarily exercise their rights under the principles of openness, fairness and justice". Creditors of listed companies or other creditors of controlling shareholders may apply to the people's court for cancellation if they think that the "share repurchase and debt repayment" scheme harms their interests. If the shareholders of a listed company think that the relevant resolutions of the shareholders' meeting of the listed company infringe upon their interests, they can also apply to the court for cancellation, or they can ask the listed company to buy back the shares they hold at the market price (such as the average share price on120th after the adoption of the "Share Repurchase for Debt" scheme) (there is no clear law on this, and it can be handled fairly in good faith).

The impact of paying debts with shares on the company: it will reduce the company's total share capital, creditor's rights and assets, but the liabilities will remain unchanged and the asset-liability ratio will increase.