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On Perfection of the financing channels of MBO and its law

Author: LiGe From: www.yourpaper.net Posted: 2010-06-01 00:19:03 Read:
Keywords: MBO the MBO financing legal system
Abstract: the with the deep reform of state-owned enterprises, more and more people are aware of, must carry on the strategic reorganization of the state-owned economy, the realization of state-owned capital from the general competitive sectors to strategic sectors.In this paper pointed out the existing legal system of our country MBO financing problems, from the guide of bank funds, private equity funds, trust involved in the MBO angle, puts forward thinking and suggestion on perfecting legal system of our country.
, the introduction of
MBO (ManagementBuy - Outs) that "MBO", or "MBO" and "management buy-outs".The so-called management buy-outs, is refers to the company's managers or managers use leveraged acquisitions, self-financing, by way of borrowing capital to purchase the shares of the company, thus changing the company's ownership structure, control structure and asset structure, a kind of purchase behavior makes the original management of enterprises become the owner of the.
For a long time, some of China's state-owned enterprises lack of efficiency, long-term incentive and selection operator of the problem has not been solved fundamentally.With the deepening of state-owned enterprise reform, people have realized more and more clearly, we must carry out strategic reorganization of the state-owned economy, the realization of state-owned capital from the general competitive sectors to strategic sectors.On the other hand, was founded in the beginning of reform and opening up some so-called "private collective enterprises", there has been no investment main body, the development of enterprises mainly rely on bank loans and the enterprise's own accumulation, due to unclear property rights cause enterprise development sluggish problems need to be solved, which provide the possibility for the domestic MBO.At present, the domestic MBO the role of specific performance in four aspects: one is to solve the problem of state-owned enterprises "owner" problems, promote the reform of state-owned property right system; two is to solve the problem of private enterprises with "red hat" problems left over by history, realize the enterprise to the true owner "regression", the real recovery of private enterprises face property, so as to remove the property rights obstacles for the long-term development of private enterprises; three is to help state-owned capital gradually withdraw from non - competitive industries; four is to motivate and constrain the managers of the management, and reduce the agency cost.So the study on the MBO financing in China, has important practical significance.
The presence of two, China's MBO financing problems of the legal system of
(a) legal problems of bank funds
"Securities Law" will be revised to prohibit the bank funds into the stock market to widening the channel, no funds into the stock market, but the MBO is still unable to use bank funds to finance.In 1996 the people's Bank of China promulgated the "loan general clauses" Twentieth stipulates: "the borrower shall not engage in loans and equity investment", and provides the corresponding legal liability in the seventy-first article, borrowers with loans and equity investments by the lender to part or all of its loans plus interest, the situation is particularly serious, by borrowers stop payment borrowers not use the loans, and recover part or all of the loan ahead of schedule."Commercial bank law" provisions of article forty-third: commercial banks shall not engage in trust investment and securities business in the territory of the people's Republic of China, not to non-self-use immovable or non-bank financial institutions and corporate investment, except as otherwise provided by the state.Bank capital can not flow the stock market makes the disconnection between the mandatory provisions of commercial banks and the management buy-out, the banking financial institutions to provide loans for MBO have suspected.
(two) the legal issues bonds to finance the
Article L6 the "Securities Law" provisions, the open corporation bonds, it shall meet the following conditions: (1) the Limited by Share Ltd's net assets of not less than 30000000 yuan, limited liability company's net assets of not less than RMB 60000000 yuan; (2) the cumulative debt balance does not exceed 40% of the net assets of the company; (3) the last three the average annual distributable profits to pay one year's interest on the company bonds; (4) to raise funds to meet the national industrial policy; (5) the bond interest rate does not exceed the level of interest rates set by the State Council; (6) other requirements prescribed by the state council.Open corporation bonds to raise funds must be used for the purposes approved, shall not be used for making up losses and nonproductive expenditure.Listing Corporation to issue corporate bonds convertible into shares, in addition to the provisions of the first paragraph shall conform to the conditions, it shall meet the conditions on the public offer of stocks, and submitted to the State Council for approval of the securities regulatory authority.These constraints each become management uses bonds financing obstacles.Therefore, at present in the Management Buy-out in China has done has not yet appeared the distribution firm bonds financing case.
(three) the legal issue of trust financing
"Trust" and "Trust Investment Company management approach" introduced, let the domestic investment banks and the management buy-out is very exciting.But in the past period of time, people gradually realize the "trust finance 100 treasure chest" is still in the weak position in the other mechanism, resources are still scarce in the background, main performance issue in the trust plan risk is big, the high cost of financing, trust company assets (equity) and off-balance-sheet assets (trust) pooling risk and trust company and income transactions legal risk.Therefore, provisions in April 14, 2005 formally issued "transfer of state-owned property rights of enterprises to management Interim Provisions", the management shall not be taken to trust or by indirectly transfer of state-owned property rights of enterprises.
(four) the legal issues of private fund
At present, many of China's MBO is not willing to disclose the source of funds, because they actually use the private equity financing.The so-called private funds is also called the raising of funds to specific target, namely through non-public way to a small number of institutional investors and wealthy individual investors to raise funds for the establishment of the fund."Securities investment fund law" for the private equity fund and not from the legal norms, the private equity fund is still in the state be now open now covert.
three, perfecting the relevant legal system thinking and suggestion of
(a) norms to guide the bank funds to participate in the Management Buy-outs
The revision and supplement to the existing related laws and regulations, based on perfecting risk assessment and control mechanisms can be allowed to commercial bank loans for equity capital investment, management buyout loan service, lift the financing difficulties of Management Buy-outs in China, and also for the bank to bring new profit growth point.Our country is limited to bank funds into the management buy-outs, is because of China's commercial banks lack risk assessment and control mechanism, the increase in bank loans eventually caused blind in bad loans, the impact of China's macroeconomy form.But along with the global economic integration and China's financial market gradually opening up, reform in recent years, commercial banks have steadily, the ability of commercial banks to resist the risk also gradually improve.Risk assessment and control mechanism of commercial banks is becoming more and more perfect.In this form is still used for equity investment in bank loans, that is not suitable for ages and the new economic form, it will restrict the development of China's economy.In view of the current situation, China commercial banks eased lending restrictions, can consider allowing commercial banks to provide financing support to management in a certain extent, closed to the management of loan, accounts for.
(two) private equity fund should become an important way to solve the financing problems of MBO in China
The main source of private equity funds are enterprise funds, society on a large number of capital and the wealthy individual savings; among them, the proportion of funds of enterprises is more and more big.Because the characteristics of market operation of private equity funds, many public offering fund problem difficult to solve, private equity funds can be solved.First is the fund holders and managers incentive compatibility problems.The securities law, the public offering fund daily fund management fees for the day the net value of the fund assets by 1 / 365, the proportion is very high, which led directly to the part of the fund management would in a short period of time to raise equity to benefit, upon end bonus, and quickly do low value, easy to cause the illegal operations.In contrast, most only to private equity fund managers a fixed management fee to maintain spending, income from dividends in proportion to the extraction, which makes the fund holders and management interests.The second is the fund manager's risk mechanism.International fund holders to hold the fund from 3% to 5% of the shares, in case of loss, this part will first be used to guarantee payment, tied to the managers and fund interest.The majority of private fund in our country is also used in this way, the difference is the proportion is as high as 10% ~ 30%, so when a loss occurs, it is the loss of the fund manager is the most serious.Because the private equity fund has the advantages of public offering fund does not have, so it should become the important way of MBO financing.
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