Equity pledge of unlisted companies

Legal analysis: unlisted companies need to register with the local administration for industry and commerce when signing the pledge contract. In practice, local institutions have different provisions on pledge contracts, and some need to formulate contracts according to their format and content, and need to know in advance. Equity pledge is very common in listed companies and is one of the means of financing.

Legal basis: People's Republic of China (PRC) Company Law.

Article 72 When the people's court transfers the shareholder's equity according to the compulsory execution procedure prescribed by law, it shall notify the company and all shareholders, and other shareholders have the preemptive right under the same conditions. Other shareholders who fail to exercise the preemptive right within 20 days from the date of notification by the people's court shall be deemed to have waived the preemptive right.

Article 73 After the equity is transferred in accordance with the provisions of Articles 71 and 72 of this Law, the company shall cancel the capital contribution certificate of the original shareholder, issue the capital contribution certificate to the new shareholder, and change the records of shareholders and their capital contribution in the articles of association and the register of shareholders accordingly. There is no need to vote at the shareholders' meeting to amend the Articles of Association this time.

Article 74 In any of the following circumstances, a shareholder who votes against the resolution of the shareholders' meeting may request the company to purchase its equity at a reasonable price:

(1) The company has not distributed profits to shareholders for five consecutive years, but the company has made profits for five consecutive years and complies with the provisions of this Law on profit distribution;

(2) The merger, division or transfer of the company's main property;

(3) Upon the expiration of the business term stipulated in the Articles of Association or other reasons for dissolution stipulated in the Articles of Association, the shareholders' meeting will adopt a resolution to amend the Articles of Association to make the Company survive.

If the shareholders and the company fail to reach an equity purchase agreement within 60 days from the date of adoption of the resolution of the general meeting of shareholders, the shareholders may bring a lawsuit to the people's court within 90 days from the date of adoption of the resolution of the general meeting of shareholders.