Research on the Protection of the Rights of Holders of Perpetual Bonds of Commercial Banks under the Company Law of China

Perpetual bonds, also known as “perpetual capital bonds”, are a low-cost financing method that plays a very important role in the financing of companies and banks. In recent years, perpetual bonds issued by the State Commercial Bank of China have been repaid in the form of “redemption of the old and replacement of the new”, and by the end of 2024, the perpetual bonds have reached the peak of domestic repayment. Since perpetual bonds do not have a repayment period or a long repayment period, the issuer grants the right to redeem the bonds at the time of bond issuance by “authorisation”. In this process, the protection of the rights and interests of perpetual bond holders has become an important factor in determining the quality of perpetual bonds of commercial banks. However, in the process of protecting the rights and interests of perpetual bond holders under the current Chinese Company Law , there are various problems in the protection of the rights and interests of bondholders, such as high risk for bondholders, difficulty in selling, lack of purchase standards, and low credit rating standards for perpetual bonds. Based on these issues, this paper analyzes the legal issues related to the protection of the rights and interests of perpetual bond holders under the Chinese Company Law . First, we examine the three concepts and linkages of corporate law, perpetual bonds, and the protection of the rights and interests of holders, and propose ways to clarify their internal connections. In addition, through the study of the current situation of the protection of the rights and interests of perpetual bond holders, this paper analyzes the establishment and application of the relevant system of perpetual creditor’s rights, as well as (1) the protection of the rights and interests of perpetual bond holders under the Company Law , mainly to improve the transparency and fairness of corporate development, (2) to standardize the interest payment and repayment sequence, (3) to strengthen the requirements for corporate information disclosure, (4) to provide legal remedies for corporate bondholders, and (5) to improve the safety of corporate bondholders, and to provide opinions on the possibility of continuous use of perpetual bonds. We believe that this improvement in the protection of the rights and interests of corporate bondholders will not only help lay the foundation for the long-term development of the company, but also play an important role in subsequent research in this area.