In recent years, more and more listed companies use quasi-security measures for credit enhancement. These measures generally take the form of top-ups by the listed company, commitment to debt repayment in the place of the debtor, liquidity support and repurchase liability to ensure realisation of creditor’s rights.
Partner
Lantai Partners
As these measures are different from guarantee, mortgage, pledge and other traditional guarantee measures specified in the Security Law, listed companies generally lay off internal resolution and information disclosure procedures required for providing security for others. This article explores the effect of quasi-security measures adopted by listed companies without internal resolution, by analysing their nature.
Provisions of quasi-security measures generally state as follows: “The person obliged for top-up agrees to take the top-up responsibility to the creditor in respect of the debt repayment liabilities of the debtor,” or, “the person repaying the debt in the place of the debtor shall fulfil corresponding liability of debt repayment in the place of the debtor under the circumstance that the debtor fails to repay the debt”.
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Yao Xiaomin is a partner and Yuan Yuhui is an associate at Lantai Partners
29th Floor, Tower B, Disanzhiye Mansion
A1 Shuguang Xili, Chaoyang District
Beijing 100028, China
Tel: +86 10 5228 7777
Fax: +86 10 5822 0039
E-mail:
yaoxiaomin@lantai.cn
yuanyuhui@lantai.cn
