What is paying debts with shares?

Legal analysis: In a strict sense, "paying debts with shares" should be called the meaning of "buying back debts with shares". Its purpose should be to correct and solve the problem that the controlling shareholder encroaches on the funds of listed companies, and allow listed companies to buy back the shares held by the controlling shareholder at a specific price to offset the payable price with the debts caused by the controlling shareholder encroaching on the funds of listed companies.

Legal basis: Article 161 of the Company Law of People's Republic of China (PRC), a listed company may issue corporate bonds convertible into shares upon the resolution of the shareholders' meeting, and the specific conversion method is stipulated in the Measures for Raising Corporate Bonds. When a listed company issues corporate bonds that can be converted into shares, it shall report to the the State Council Securities Regulatory Authority for approval. When issuing convertible corporate bonds, the words convertible corporate bonds shall be marked on the bonds, and the amount of convertible corporate bonds shall be stated in the corporate bond stub book.

Article 162 When issuing corporate bonds convertible into shares, the company shall exchange shares with bondholders according to the conversion method, but bondholders have the right to choose whether to convert or not to convert shares.