Institutional Structure of Equity Transfer Guarantee from the Perspective of the Principle of Distinction:Focused on the Rule of Equity Transfers under the New Company Law
The new Company Law adopts the principle of distinction with respect to the equity changes in a limited liability company in accordance to the system of rights changes established in the Civil Code.Based on the principle of distinction,equity transfer security consists of both the juristic acts of disposition aimed to the equity transfer and the act of obligation of the obligor to return the equity upon the settlement of the agreed debt.While the conception of right as a bundle of rights,such as real property rights and equity rights is not recognized,it is a complete and indivisible right in China's legal system.The guarantee acquires full rights to the equity and is entitled to the rights and assumes the obligations and responsibilities of a shareholder.The guarantee and the guarantor have made an agreement that the transfer of equity is for the purpose of securing the debt.This agreement,as a juristic act of obligation,is binding only for both parties.Otherwise,it constitutes a breach of contract,and the guarantee shall bear the corresponding liability for the breach.
equitytransfer guaranteechange of rightsacts of dispositionacts of obligation
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