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On Tunneling and governance of listed companies

Author: LiFuQiang From: www.yourpaper.net Posted: 2007-11-20 08:01:15 Read:
Abstract: A large number of listed companies in the existence of an act of the tunnel, the fundamental reason is the lack of corporate governance structure. This paper analyzes the performance of the behavior of the tunnel and causes, proposed the idea of ??corporate governance option full circulation, improve the internal governance mechanism, cultivate a positive institutional investors, improve the legal system, the reform independent audit commissioned mode, to strengthen the integrity of the building and countermeasures.
Keywords: controlling shareholders of listed companies the tunnel acts of governance
I. Introduction
China's capital market after more than 10 years of development, has made no small achievement, but also a lot of problems, the major shareholder through a variety of arrangements against the interests of small shareholders is one. Harvard economist Andrei Xielai Fu et al "tunneling" (tunneling) to describe the "disgraceful" behavior of the major shareholders. That is the largest shareholder is often not see the sun by digging underground tunnels transfer of listing of the Company's assets or profits, emptied listed companies. This tunnel behavior is not unique to transition economies or developing countries, on the contrary, it is a common phenomenon in worldwide. So, how to reduce the tunnel behavior has become a problem for modern corporate governance.
Second, the tunnel behavior
(A) a majority shareholder false investment
The largest shareholder false investment, the establishment of major shareholders in listed companies or capital increase does not fulfill its contribution act or founded or withdrawal of its funding, including public offering false capital contribution or completely, placing false investment, acquisitions funded untrue. The largest shareholder of false capital contribution, not only seriously affected the normal production and business activities of the listed companies, and damage the company's credit, infringe upon the legitimate rights and interests of the stakeholders, but also seriously disrupted the normal order of the capital market. Power 28 major shareholder Jingzhou City Bureau arrears allotment of funds of 23.2 million yuan; Fuzhou Finance Bureau, Min Fu shareholders not to pay for a long time its allotment of funds 51,978,900 yuan; the Kangsai Group listed its major shareholder Kangsai Industrial more than 6800 million shares paragraph was "borrowed" the public placement.
(B) a majority shareholder retention of listed companies to raise funds
As a sponsor of major shareholders the interception of listed companies to raise funds on a natural advantages. They are easy to use subrogation management of funds raised will be trapped raise funds thought to his own use. March 2000 listed 39 medicine, the actual funds raised 16.7 billion yuan, the largest shareholder interception occupied 25.8 billion, the occupancy ratio was more than 154%. After the the Jinan Qingqi first offering to raise funds in place, there are 300 million yuan three major banks forcibly withheld on behalf of the the Qingqi Group's debt.
(C) substantial shareholder for free occupied capital of listed companies
"Maneuvers", "advance", "borrow", "bilk", "nibble" appropriated funds of listed companies, such examples countless pieces. Tokai shares of major shareholders of listed companies through loans from the bank, and then changed hands to lend large shareholders, and affiliated companies. In this way, the second largest shareholder of Agriculture, the East China Sea Corporation owed 521 million yuan of listed companies, its subordinate Bandung real estate company is owed 697 million yuan, 1.2 billion yuan of crushing debts in the East China Sea shares who became the East China Sea shares "nightmare." The largest shareholder of Guangdong Kingman on behalf of the Group's investment, but it is used in Cantonese Kingman money, and other projects mature by the acquisition of listed companies, more than 10 billion boondoggle. Power 28 arrears of Power 28 up to 246 million yuan, Prismatic Industrial Reach Group receivables of 348.6 million yuan, these arrears long delay also somehow exemption, a direct result of the loss of listed companies .
(D) the company's largest shareholder through insider trading transfer of resources out
Special status, the status of a major shareholder of the use of insider trading to achieve their own interests, such acts include direct theft or fraud (Of course, it is illegal but difficult to find) and related party transactions. Inextricably linked, related party transactions are very common, and became the largest shareholder of transfer listed company resources against the interests of the minority shareholders of a shortcut between the listed companies and the largest shareholder.
1, using the resources of the transfer of related party transactions of listed companies. This way: the purchase and sale of raw materials and products, the transfer of income and expenses, assets and equity trading. The features of this behavior is cheap to acquire, sell high, in short, reflect the intent of the largest shareholder transactions.
2, loans or loan guarantees on behalf of the listed companies. Zhongguancun Zhongguancun Communication Networks 25.6 billion bank loan for the company's shares of the company on June 1, 2001 to provide security, the amount of such guarantee 145% of the net assets. Leshan Electric Power controlling shareholder of Leshan City Water Company is a party to the state-owned shares of the Company hosting Jiaotong University, Sichuan Province Innovation Investment Co., Ltd. 2,500 million in bank borrowings of joint and several liability guarantee.
3, to give the management of listed companies and their performance does not match the remuneration, resulting in management and major shareholders in collusion. Minority shareholders do not want to because of the huge cost of supervision and management oversight resulting in the "free rider" behavior, the large shareholders and management of the Company together wantonly damage the interests of small shareholders.
(E) belong to the minority shareholders through a rights issue or the issuance of new shares plundering of the wealth
Ventilation is not large shareholders are willing to additional voluntary renunciation of the allotment of diluted shares to get the flow of capital to shareholders through a high premium for shareholders of circulation because these diluted subsequent releases and will not change the status of large shareholders holding and Capture Control income or premium situation. After the allotment or issuance by the high prices, the largest shareholder of use of the advantages of its absolute or relative of a controlling stake in the listed company as a "small treasuries" any occupation of the capital of listed companies, investment behavior, embezzlement of assets, non-fair related party transactions means to obtain the hidden income.
(F) the use of the asset restructuring hollowed listed companies
The reorganization of assets this is an important means to achieve the optimal allocation of resources to improve asset quality, improve the economic and industrial upgrading, conversion, but used by recombinant shareholders to "loss-interested. Controlling stake, Some recombinant shareholders use equivalent asset replacement, misappropriation of funds, the use of shell resource and again equity transfer profit and listed company for its affiliated companies, loan guarantees and other means, will be re-side property accounted for existing.
Third, the root cause of tunnel behavior
(A) a majority shareholder "dominance", shareholding structure is irrational. "Dominance" generally refers to equity in the share capital structure of listed companies, individual shareholders have absolute control of the company. "Dominance" is not bad, but because of China's listed companies in joint-stock reform is not complete, protection of minority shareholders and market Fair Trade Act system system is not perfect, representatives of state ownership of long-term absence and the split share structure, an external monitoring mechanism The absence of minority shareholders "free rider" behavior causes the controlling shareholder of irrational behavior or even seriously distorted corporate governance functions have weakened or even lost.
(B) Equity Mobility division, large shareholders and minority shareholders' interests are inconsistent. As of the end of 2004, 714,900,000,000 shares of the total share capital of the listed company, the non-tradable shares amounted to 454.3 billion shares, representing 64% of the total share capital of the listed company, the non-tradable shares 74% state-owned shares. Between the interests of equity liquidity split tradable shareholders (minority shareholders) and non-tradable shareholders (shareholder) inconsistent or opposition, shareholders of tradable shares and non-tradable shareholders in an unequal status, it is China's capital long-term market in an abnormal state of the most fundamental institutional reasons (Wu Xiaoqiu, 2004). Therefore, major shareholders may at the expense of the interests of small shareholders to pursue their own interests to maximize.
(C) The legal system is not perfect, weakening the protection of the interests of small shareholders. From a macro point of view, the "Company Law", "Securities Act" is the most important laws to regulate the capital market and standardize corporate governance, but these two laws with significant deficiencies in the system, there is capital and company competitive operating environment requirements. The powers of the chairman of the corporate governance out of control, default by the Board of Directors, Supervisory Committee oversight, internal control problems associated with defects of the above regulations.
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