Can domestically listed foreign capital shares be used for overseas
mortgages?
The Guaranty Law of the PRC states that shares and shares
of stocks that may be legally transferred may be pledged. If the shares
are traded on stock exchanges, it is permitted to use them for a pledge.
Important to note is that there must be a written contract between
the pledgor and the pledgee as well as a registration at the relevant
agency.
Non-listed foreign capital shares may be traded on B-share
markets after approval, although pledging of them is restricted:
1. Promoter shares in a B-share company with foreign capital shares may
not be transferred within three years after forming the company, and
thus cannot be pledged.
2. If they are pledged, approval is needed
from the foreign capital approval authority that approved the formation
of the B-share company. Pledge registration must then be performed
with the securities registration agency.
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