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Discussion on the reorganization of listed companies related party transactions

Author: HanMei From: www.yourpaper.net Posted: 2009-04-29 17:37:45 Read:
[Abstract] asset restructuring of listed companies to improve asset quality and results of operations is important. This paper analyzes the existing problems related party asset restructuring of listed companies in China, and put forward the corresponding countermeasures to overcome the adverse asset restructuring, the wrongful act of the adverse impact of China's economic order.

Take related party transactions is widespread in the reorganization of listed companies in China. General market transactions, the parties to the transaction because there is no common interests, often from their own economic interests, are generally not easily accept unfavorable terms, which are formed on the basis of basic information symmetry, Liberty transaction is a fair dealing, disclosure of financial reporting is generally considered on the basis of fair trade. In the presence of a related party relationships, transactions between related parties are often not built on the basis of fair trade. Because, related party transactions, the lack of full competition, free exercise for conditions, and due to the special relationship of the parties to the transaction and not-for-profit purposes, often intersect or convergence of the interests of both sides, thus affecting the transaction. Often through fraudulent transactions between affiliated companies can easily reach various purposes such as improving business performance.

A reorganization of listed companies associated with the type of transaction

Reorganization of listed companies in China mainly related party transactions other asset transactions between subsidiaries of listed companies and their parent or parent belongs. The main types there are:

(A) removal of
Listed companies to divest non-performing assets, and by other subsidiaries of the parent company or the parent company belongs to disk access. Applicable to listed companies involved in the non-performing assets urgent need to get out.

(B) blood transfusion
Parent to inject quality assets with strong profitability of listed companies. Applicable to listed companies "malnutrition". In this way, the listed companies can be acquired by way of cash, or the placement of shares of listed companies, the parent company to a non-cash assets as the allotment of funds injection. Because the parent company in order to achieve better development, must rely on the listed holding company's finance functions continue to obtain funds through the stock market, make an inventory of existing assets. Scale and improving efficiency across the whole organization, the interests of the whole enterprise group will have to inject quality assets into the listed company, spun off its non-performing assets, so that listed companies cash in the stock market; or face " delisting, lost the financing capacity of the securities market, and is likely to endanger the development of the Group as a whole.

(C) hybrid
Listed companies to divest non-performing assets that belong to other subsidiaries by the parent company or the parent company to access disk, while the parent company to inject quality assets with strong profitability of listed companies. Generally the acquisition of listed companies, some private enterprises or other enterprises mostly. After the acquisition as soon as possible to improve the level of profitability of listed companies, both his listed companies inject high quality assets and the need for non-performing assets or bad assets to be stripped, in order to achieve the purpose of listing buy "shell".

, The main problems of the related party asset restructuring

The reorganization of assets related party transactions as soon as possible to improve asset quality and operating results of listed companies is important, but we also should be concerned about the adverse impact to the stock market. If there is a large number of non-standard asset restructuring related parties will distort resource allocation function of the capital market and mislead investors, profit manipulation through the reorganization of assets related party transactions, the major shareholder through it harm the economic interests of other shareholders or cause the loss of state assets.

(A) the presence of a large number of non-specification related party asset restructuring, will distort the capital market allocation of resources function and misleading investors
The most basic function of the capital market is the optimal allocation of resources, social resources to excellent performance, the development prospects of the company listed concentration, thereby enhancing the efficiency of resource use. However, the presence of non-specification related party asset restructuring, so that those who do not have much future development of company's results of operations can be suddenly elevated, giving cause an illusion of prosperity, investor funds to focus on these companies, will have a "bad money drives out good money. "consequences, leading to low efficiency of resource use. Such listed company's share price often at a high level, easy to form a huge bubble, and endanger the stability and development of the securities market. In addition, due to the operation of related party transactions and cause the price to rise, likely to mislead investors, to form a more investment underperformance more money the error concept is not conducive to the healthy development of China's capital market.

(B) the reorganization of assets related party transactions become the largest shareholder to seek excess returns means
China's capital market is the beginning of the establishment of state-owned enterprises out of poverty services, and financing in the first place, and the optimization of resource allocation in the second place, the structural arrangements of the listed companies, is basically the largest shareholder in position of absolute control, so that this belongs to the general meeting of the company's highest authority null and void, to become a voting machine. Therefore, in the reorganization of assets related party transactions, major shareholders out of self-interest, ignoring the interests of small shareholders. China's securities market management system is not perfect, as the largest shareholder of the controlling shareholder, often through related party transactions, and even gold for junk "quality assets in exchange for cheap expensive low-quality assets, the listed companies to rapidly improve their business performance, For eligible for allotment, from the the investors hands of misappropriating; then, by the listed company to acquire its own so-called "quality" assets for cash in the capital market, in the repeated replacement of assets and related party transactions illegal excess returns, serious against the interests of minority shareholders. (C) lack of regulatory mechanism for the reorganization of assets to related parties, to the detriment of the country and the interests of small shareholders
China's state-owned assets management system have yet to be straightened out, listed companies in China equity on behalf of absence and lack of oversight mechanisms, in the day-to-day process of business operations, the national state-owned assets (equity) to the part of people to manage, they vote on behalf of the state-owned shares, there may be a "moral hazard" and "adverse selection" behavior. Interests of this part of the national interests and the interests of shareholders are often not exactly the same, when there is a conflict, the distribution of benefits can easily tend to a small number of people, especially when large shareholders to participate in a state-owned nature, and the largest shareholder control of the the company's business decision-making rights, it is possible not only harms the national interests of the shareholders, but also damage the interests of minority shareholders, which appeared the phenomenon of internal control. Internal control is very easy to manipulate transfer prices through related party transactions, or the transfer of profits to maximize their own interests.

Regulate the reorganization of listed companies related transactions countermeasures

(A) improve the relevant laws and regulations to protect the national shareholders' interests and the interests of small shareholders
China is currently involved in related party transactions and regulations "Accounting Standards for Business Enterprises No. 36 - Related Party Disclosures", the "Company Law". 2005 issued by the Company Law "provides that: the Company's controlling shareholders, actual controllers, directors, supervisors and senior management personnel and others may not use their relationship encroaching on the interests of the company; Otherwise, the losses caused to the company, it should be liable for damages. The clear the directors avoidance system, the directors of listed companies and the resolutions of the meeting of the Board of Directors involved in the matter enterprises affiliated, shall not exercise the right to vote on this resolution, and shall not exercise voting rights on behalf of other directors; meetings of the Board by a majority of unrelated Directors' attendance can be held at a meeting of the Board Resolutions shall be approved by a majority of unrelated directors, the unrelated directors attended the Board of less than three, the matter shall be submitted to the general meeting of shareholders of listed companies to consider. This modification of the "Company Law", the related party transactions included in the scope of "Company Law" this basic legal norms. Securities administration department and the stock exchange should be developed on this basis corresponding aimed at protecting minority shareholders and national interests and the implementation of regulatory information disclosure on related party transactions normative systems. Has a large amount of one-off transaction, pricing is more complex, and must hire a certified public valuer to assess due to the reorganization of assets related party transactions, according to current standards require disclosure (nature, type, elements) investors can not determine the reorganization of assets related trading is injurious to their own interests, therefore, should be added to the disclosure of asset evaluation agencies, who hire the amount of the assessment and evaluation reports briefly on the final transaction price and the evaluation of the amount of the difference and the reason.
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