Debt-to-equity swap refers to the behavior of financial asset companies established by the state to convert the creditor's rights between banks and enterprises into the equity of financial asset companies and enterprises. In China, the company law is a legal norm that restricts and regulates various affairs of enterprises. I. Provisions of the Company Law on debt-to-equity swap: According to the provisions of the Company Law, creditor's rights cannot be used for capital contribution. According to Article 27 1 of China's new Company Law, it is no longer prohibited to contribute by creditor's rights. The new Company Law has reserved legal extension space for this system, which will be filled by more practice and legislation. Therefore, from the perspective that the new company law is an open legal norm, the financial asset management company established by the state takes the form of creditor's rights as its shareholders, and its rights should be protected by law. From a legal point of view, creditor's rights cannot be directly converted into equity, because equity formed by investment and creditor's rights formed by contract are two completely different civil legal rights. Creditors are the obligees of contractual debts, not the holders of enterprise shares. The Company Law does not allow creditor's rights as capital contribution. Creditor's rights can neither be directly used as monetary capital contribution, nor can they replace physical and other forms of capital contribution. However, from the perspective of the debt-to-equity swap system itself, it actually takes advantage of the fundamental difference between creditor's rights and equity. Creditor's right is a contractual right, while equity is a non-contractual right. As a debt, the loan principal and interest not only have the right of compulsory claim, but also the enterprise should list these debts as liabilities or financial expenses on the debtor side of the enterprise balance sheet. Its increase directly affects the profits of enterprises and determines whether enterprises can continue to operate. As the capital of an enterprise, equity owners have no right to claim compensation, only the right to pay dividends when the enterprise is profitable. Moreover, the equity is listed in the owner's equity of the enterprise's balance sheet, and its increase will not only affect the profit of the enterprise, but also enhance the sustainable operation ability of the enterprise. Debt-to-equity swap is to take advantage of this difference, convert creditor's rights into equity, reduce enterprise loan principal and interest expenditure, increase enterprise capital, and finally achieve the goal of turning losses into profits. The second is the capital activity of debt-to-equity swap: revitalizing the non-performing assets of banks, separating the non-performing assets of banks and turning them into equity of enterprises. This can greatly improve the bank's credit status, thus revitalizing the bank's funds. Through the participation of financial asset management companies in enterprise management, enterprises can be reorganized, single state-owned capital can be changed and the activity of state-owned capital can be improved.

Legal objectivity:

People's Republic of China (PRC) (China) Company Law

Article 27

East can contribute money, but also in kind, intellectual property rights, land use rights and other non-monetary property that can be valued in money and can be transferred according to law;

However, except for the property that cannot be used as capital contribution as stipulated by laws and administrative regulations. Non-monetary property as capital contribution shall be evaluated and verified, and its value shall not be overestimated or underestimated. Where there are provisions in laws and administrative regulations on evaluation and pricing, those provisions shall prevail.