Equity pledge, if the company goes bankrupt, the company needs to pay off all debts with bankrupt property. Pledged shares have the priority to pay off, but if the bankrupt property is insufficient to pay off, the pledged property cannot be paid off, and the company does not need to repay it after cancellation.

legal ground

Article 4 of People's Republic of China (PRC) Company Law

Shareholders of a company shall enjoy the right to return on assets, participate in major decisions and choose managers according to law.

Article 440th of the Civil Code

The following rights that the debtor or a third party has the right to dispose of may be pledged:

(1) Bills of exchange, promissory notes and checks.

(2) Bonds and certificates of deposit.

(3) Warehouse receipts and bills of lading;

(4) Transferable fund shares and equity;

(5) Transferable intellectual property rights such as the exclusive right to use a registered trademark, patent right and copyright;

(6) Existing and future accounts receivable;

(7) Other property rights that can be pledged according to laws and administrative regulations.

Article 443

Where a fund share or equity is pledged, the pledge right shall be established at the time of pledge registration.

After the pledge, the fund share and equity shall not be transferred, except that the pledgor and the pledgee agree through consultation. The pledgor shall pay off the debts in advance to the pledgee or deposit the proceeds from the fund share and equity transfer.