According to the second paragraph of Article 7 1 of China's Guarantee Law, there are three ways to realize the pledge right, namely, discount, sale and auction. However, due to the particularity of equity pledge property, the realization method of equity pledge has its own characteristics.
(A) the realization of equity pledge, the result is the transfer of equity. Therefore, the disposal of pledged equity must comply with the provisions of the Company Law on equity transfer. If the capital contribution is used as the pledge object, it can be owned by the pledgee at a discount, or it can be transferred to others by means of sale or auction. However, if the stock is pledged, it must be transferred at a legally established stock exchange; Registered shares should be transferred by endorsement; Bearer shares shall be transferred in the form of delivery at the stock exchange. Therefore, it is not appropriate to use discount or auction.
(2) If the pledge is made in the form of capital contribution, the company shall be notified at the time of discount, sale and auction, and the company shall notify other shareholders, who may exercise the preemptive right under the same conditions.
1. Attention should be paid to the difference between shareholders' preemptive right and pledgee's preemptive right. Shareholders' preemptive right means that when shareholders of a limited liability company transfer their capital contribution, other shareholders of the company have the right to purchase the capital contribution to be transferred in preference to non-shareholders under the same conditions. The priority right of the pledgee means that the pledgee has the priority right to be compensated for the value of the pledged property. However, the pledgee has no priority to dispose of the pledged capital.
2. Shareholders' failure to exercise the right of purchase at the time of pledge does not deprive them of exercising the right of purchase when the pledge is realized. Because the equity pledge is only the establishment of security interest in equity, it does not necessarily lead to the transfer of equity. Therefore, when the equity pledge is realized, other shareholders can still exercise the preemptive right.
3. After the transfer of equity due to the realization of equity pledge, the register of shareholders shall be changed, otherwise the transfer will not be effective for the company.
4. If the equity of the Chinese investor in a foreign-invested enterprise is pledged, the value of the pledged equity must be evaluated by the state-owned assets evaluation institution and confirmed by the state-owned assets management department when it is realized.
5. If the company goes bankrupt before the creditor's rights secured by the pledge expire, the pledgee can realize its pledge right by discounting, selling or auctioning the company's remaining property.