What is equity pledge and what is equity pledge

Pledge of stock rights, also known as equity pledge, refers to the pledge established by the pledgee with its equity as the subject matter of the pledge. According to the provisions of the legal system of security in most countries in the world, pledges can be divided into movable property pledges and rights pledges based on their subject matter. Equity pledge is a type of pledge of rights.

The establishment of an equity pledge enables the creditor to obtain a security interest in the pledged equity, which is an equity pledge.

China's company law lacks provisions on equity pledges, but the "Opinions on the Regulation of Shares" implemented before the promulgation of the company law allows the establishment of share mortgages. It was only after the Company Law that the Guarantee Law was promulgated that truly established China's pledge guarantee system, including the content of equity pledge. For example, Article 75, Paragraph 2 of the Security Law stipulates that "shares that can be transferred in accordance with the law" can be pledged, and Article 78 further supplements.

In addition, on May 28, 1997, the Ministry of Foreign Economic Cooperation and the State Administration for Industry and Commerce jointly promulgated the Several Provisions on the Change of Shares of Investors in Foreign-invested Enterprises, which specifically confirmed that investors of foreign-invested enterprises "pledge their equity to creditors with the consent of investors of other parties".

Hello, also known as equity pledge, refers to the pledge established by the pledgee with the equity it owns as the subject matter of the pledge. The subject matter of equity pledge is equity.

For example] Shijiazhuang Changshan Beiming Technology Co., Ltd. **** recently received a notice from the major shareholder Beijing Beiming Weiye Holdings **** that Beiming Weiye handled the pledge repurchase transaction business of 18,500,100 shares of restricted shares held by it after the initial offering, and the specific matters are as follows.

Features] The value of equity is easily affected by the company's conditions and market changes, which makes it difficult to grasp the security function of equity pledge, and the risk is relatively large for the pledgee. Pledged by **, because **is valuable**, its liquidity and liquidity are strong, so its guarantee function is strong. If the capital contribution is pledged, the liquidity and liquidity of its equity are poor, so its guarantee function is relatively weak.

Risk Disclosure: This information does not constitute any investment advice, and investors should not use such information to replace their independent judgment or make decisions based solely on such information, does not constitute any buying and selling operations, and does not guarantee any returns. If you are doing it yourself, please pay attention to ** control and risk control.

A pledge is the transfer of possession of a property by the debtor or a third party to the creditor, and the latter takes possession of the property as security for the former to perform some obligation to pay money or perform the contract.

Equity pledge is a type of pledge of rights. Pledge with the equity of the enterprise investor as the subject matter. If the pledge is made with a transferable ** in accordance with the law, the pledgor and the pledgee shall enter into a written contract.

If the equity registered by the ** registration agency is pledged, the pledge shall be established from the time when the ** registration agency handles the pledge registration; If other equity is pledged, the pledge shall be established when the administrative department for industry and commerce handles the registration of the pledge.

[The law is based on rough judgments].Article 440 of the Civil Code of the People's Republic of China.

1) Bills of exchange, promissory notes, checks;

2) Bonds and deposit certificates;

3) Warehouse receipts and bills of lading;

4) The first share and equity that can be transferred;

5) Property rights in intellectual property rights such as the exclusive right to use registered trademarks, patent rights, and imitation copyrights that can be transferred;

vi) existing and future accounts receivable;

7) Other property rights that laws and administrative regulations provide may be pledged.

<> "Equity Pledge. equity pledge-

One of the ways in which major shareholders raise funds.

What is a stake pledge?

An equity pledge is a pledge established by the pledgor with its own equity as the subject matter of the pledge.

To put it bluntly, when the company's funds are not enough to turnover, the big hail learns that the shareholders take ** to pledge and borrow money. It is usually pledged to banks, trusts, brokers, and other people who have funds and are willing to provide funds. This is a common type of financing used by major shareholders.

Compared with the house mortgage loan, borrowing as collateral, the bank risk is relatively large, in case one day the company's **** or delisting, the bank will lose, so in the equity pledge operation, you will see the pledge rate, early warning line, liquidation line and other concepts, let's take a look.

Practical operation of equity pledge

The major shareholder pledges the ** with a market value of 10 million yuan to the bank, and the bank will discount it, which is the pledge rate.

Assuming that the pledge is = 50%, the stock price = 10 yuan at the time of pledge, the warning line is 150%, and the liquidation line is 130%.

Then the bank will lend = 1000 * 50% = 5 million yuan.

At the same time, in order to prevent losses to themselves, the bank will also set up an early warning line and a pin fierce source bucket line.

Early warning**=10*50%*150%=yuan means that the stock price has fallen by 25% If the stock price **to the warning**, the bank needs shareholders to make up the position.

Closing the position**=10*50%*130%=yuan means that the stock price has fallen by 35% If the stock price ** reaches the liquidation line, and the major shareholder has no way to make up the position and repay the money, then the bank has the right to sell all the pledged **.

Equity Pledge Cases:

Suning Holdings' equity is pledged to **.

In December 2020, the three major shareholders of Suning Holding Group pledged all the shares of Suning Holdings to ** (China) Software Company, with a total of 100,000 shares pledged. At that time, the news shocked the market, and all kinds of speculation about Suning's liquidity were boiling. Later, it was verified that Suning Holdings only held the equity of Suning Tesco, not Suning's entity, and the equity pledge was a normal business cooperation.

First, it is normal for companies to raise funds at the end of the year. Second, the pledge is mainly given to Ali, not financial institutions such as banks or ** companies, and Suning and Ali have maintained good cooperation for a long time, which does not seem to rule out the deepening of cooperation at the strategic level.

Although equity pledge is easy to use for shareholders, there are also risks, such as the risk of liquidation, the risk of losing control, etc.

For ordinary investors, they should invest cautiously in companies with high equity pledges, pay attention to the company's annual report, evaluate the fundamentals, and be a rational investor.

Pledge is the abbreviation of pledged repurchase transaction, which refers to the transaction behavior of the qualified capital investor to provide a pledge with the equivalent value of the party held, inject funds into the qualified financial party, and agree to return the funds in the future and release the pledge.

From the provisions of the "Measures for the Administration of Pledged Loans of **Company**" (hereinafter referred to as the Measures), what does **pledge mean, which is subdivided into the following 3 points, as follows:

1. Choose stable "high-performing stocks".

In principle, the ** used for pledged loans should have good performance, moderate scale of circulating share capital, and good liquidity. For the loss of the previous year, the fluctuation range of more than 200%, or the excessive concentration of tradable shares, or the suspension of the exchange, means that if the company wants to maximize the use of its pledged loan amount, then it will prefer the stable "performance stocks" that have been recognized by the market, rather than the future "performance stocks". The reason is that the risk measurement is determined by the bank, and from a safe point of view, listed companies with stable stock prices, good performance and financial health will undoubtedly become the first choice of banks.

Dissect the true purpose of mainstream funds and discover the best profit opportunities! From Wall Street's experience, the pledge rate for blue chips is 70%, and the pledge rate for common stocks is 50%.

2. Not higher than 10% of the total circulation of listed companies

A commercial bank accepts a listed company for pledge shall not be more than 10% of the total circulation of the listed company**. The pledge of a listed company shall not be higher than 10% of the total circulation of the listed company, and shall not be higher than 5% of the issued shares of the listed company. The pledged listed company** shall not be higher than 20% of the total circulation of the listed company**.

This article determines the diversification of the company's investment and avoids only a few people being sought after.

3. **The maximum pledge rate cannot exceed 60%.

Why is it said that the pledge rate cannot exceed 60% at most, because the pledge rate is the ratio between the loan principal and the market value of the pledge. The combined effect of this provision and the provisions of Article 2 means that ** with a large circulating market value will be more likely to be favored by brokers than a small circulating market capitalization.

According to the provisions of the "Measures for the Administration of Pledged Loans of **Company**", the meaning of **pledge is obvious, not all ** can be pledged, but only high-quality stocks that are already stable can be pledged.

Legal analysis: It is a pledge established by the pledgor with its equity as the subject matter of the pledge. If the pledge is made with ** shares and equity, the pledge shall be established from the time of the pledge registration.

Legal basis: "Civil Code of the People's Republic of China" Article 443 If the pledge is made with ** shares and equity, the pledge shall be established from the time of registration of the pledge.

**After the share and equity are pledged, they shall not be transferred, except for those agreed upon by the pledgor and the pledgee. The price obtained by the pledgor from the transfer of ** shares and shares shall be paid off or deposited with the pledgee in advance.

In life, I believe everyone has heard that some people have done procedures such as car and house pledge because they are in urgent need of funds for emergency work. In fact, the "pledge" thing also exists in **, so let's make an analysis of the specific content of "equity pledge" today. Expand your knowledge!

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2. Is equity pledge a good thing or a bad thing? Does it have an impact on **?

Equity pledge is equivalent to a financing tool, which can be used to make up for it, and can also be used to improve the business situation of the enterprise.

However, there are still potential risks, such as liquidation or liquidation and loss of control in order to maintain equity.

Whether the impact on ** is good or not, it is still necessary to start with the analysis according to the actual situation.

1. Good situation.

If the company wants to pledge its equity to obtain working capital and also want to operate its main business or carry out new projects, it can be regarded as a benefit, after all, it can expand its territory. In addition, if the pledge is in circulation, this means that the number of shares on the market has decreased, and the demand has remained roughly the same.

2. The situation of negative **.

If a listed company only wants to repay short-term debts and expenses that have nothing to do with the company's development plan, it really shows the company's financial situation, and investors will lower their expectations and favorability of the company. In addition, if the equity is pledged high, in case it leads to ****, falling to the early warning line, once the company is pledged, it is easy to become a negative feedback, if the company pledges, then it will affect the market's long sentiment towards the **, which may eventually lead to a decline in the stock price.

It is to mortgage your ** company in exchange for cash for development, and then pay them back when you have the money to redeem your **. If you can't pay the money, your **company is**.

Equity pledge, also known as equity pledge, refers to the pledge established by the pledgee with the equity it owns as the subject matter of the pledge. Equity pledge is a kind of right pledge, is a common way to supplement liquidity in the market, under normal circumstances, if a company chooses equity pledge, its financing will be discounted, for example, if you finance 10 million from the bank, you may need to pledge the equity value must be more than 20 million, and the general discount rate ranges from 3-6 discounts.

Equity pledge refers to the pledge established by the pledgee with its equity as the subject matter of the pledge. Equity pledge is a financing tool that can be used to fill cash flow and improve the current operating status of the enterprise. However, there is the risk of potential liquidation or liquidation and loss of control in order to maintain equity.

Whether the impact on ** tends to be beneficial or disadvantageous, it is still necessary to start the analysis according to the actual situation.

1. Good situation.

If the company pledges its shares to obtain liquidity, and hopes to operate its main business or carry out new projects for this purpose, it can be regarded as a benefit, after all, it is conducive to expanding its territory. In addition, if the ** you pledge is in circulation, that is to say, the number of ** shares in the market has decreased, and the demand has not changed very much, so the amount of funds required to pull up the stock has decreased, and it is easier to open ** if it is in the market outlet.

2. The situation of negative **.

If the listed company only repays short-term debts and expenses that have nothing to do with the company's development plan, the company's financial embarrassment will surface, which will reduce investors' expectations and favorability of the company. Moreover, if the equity is pledged highly, if the **** situation really occurs and falls below the warning line, once the company **pledges**, it is easy to cause bad feedback, in other words, too much market sentiment for **company **pledge, which eventually leads to the possibility of stock price**.

In general, equity pledge is a financing tool that can be used to supplement cash flow and can also be used to improve the current operation of the enterprise. Because there are some potential risks in equity pledges, such as liquidation or liquidation and loss of control in order to maintain equity, etc., the impact on the best is good or bad, and ultimately depends on what the specific situation is.

This answer is provided by Compo Finance, which focuses on the interpretation of financial hot events, the popularization of financial knowledge, adheres to professionalism, pursues fun, makes financial content that people can understand, and conveys financial value in a vivid and diverse way. I hope you find this answer helpful.

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