But when this stock is pledged, there will be a price, which is generally 3-4 fold of the current market price of the stock.
If the stock market plummets in the early stage and some stock prices fall to the conversion price at the time of pledge, financial institutions will ask listed companies to pay back the money. If the listed company has no money to pay back, it will throw out the pledged shares and realize them.
Simply put, it's not a good thing.
Extended data:
The share pledge contract has the following legal characteristics:
(1) Individual services are free. Creditors and pledgors do not enjoy rights and do not assume obligations. The principal creditor is the right subject of the share pledge contract. The pledgor only has the pledge obligation in the share pledge contract and does not enjoy any corresponding rights; Creditors only enjoy rights and do not assume any corresponding obligations to the pledgor. Even if the pledgor obtains the right of recourse to perform the principal debt, it can only recover from the principal debtor.
(2) Complementarity. The pledgor's performance of the principal debt must have a prerequisite, that is, the principal debt is not performed. If the performance period of the principal debt has not expired or the principal debtor has started to perform, the pledgee has no right to sell or transfer the shares of the pledger to realize its creditor's rights.
(3) Dependence. The share pledge contract is based on the legal existence of the main contract, aiming at ensuring the performance of the main contract, and disappears with the repayment, offset and exemption of the main creditor's rights.
(4) Priority of compensation. The purpose of creditors' pledge of their creditor's rights is to ensure the realization of their creditor's rights and the safety of property interests. Due to the establishment of this kind of creditor's rights protection, when the debtor fails to perform the debt, the creditor should take precedence over the unsecured debt.
(5) registration. When concluding a share pledge contract, the pledge must be recorded in the register of shareholders and take effect as of the date of recording. This is the most obvious legal feature that distinguishes the share pledge contract from other rights pledge contracts.
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