What are the risks of equity pledge?

The risks of equity pledge are as follows: (1) The guarantee function of equity pledge is indirect. The company property where the pledged equity is located belongs only to the company, not to the pledgee or pledger shareholders, and the pledgee cannot directly obtain the management and control of the pledged property after the pledge is established. (2) The value of pledged equity fluctuates. The establishment of the pledge is based on the market value at that time, but in case of economic recession and other problems, the equity value at that time will be different from the value when the equity pledge is realized. (3) The moral hazard of the pledgor and the company will easily lead to the devaluation of the guarantee value. (D) Equity pledge can not get rid of the disadvantages of creditor's rights compensation after bad equity. Article 428 of the Civil Code stipulates that the pledgee and the pledger agree that if the debtor fails to perform the due debt before the expiration of the debt performance period, if the pledged property belongs to the creditor, it can only be paid in priority according to law.