Research On Legal Governance Of Capital Occupying From Affiliated Transactions

Capital occupying of listed company is a serious problem of our stock market. It is one of the main kinds of the capital occupying occurred that majority shareholder takes advantage of affiliated transactions to occupy the capital of listed companies directly or indirectly. The capital occupying of aforesaid kind is herein called capital occupying from affiliated transactions. With the background of transaction and the purpose of interest transfer from listed company to majority shareholder, this kind of capital occupying leads to unbalanced condition of interest between majority shareholder and listed company and finally causes great damages of listed companies capital quality as well as influences the healthy development of the stock market. Though the regulatory authorities hereby continually enhance the strength of supervision and governance against illegal affiliated transactions with some regulations enacted, the regulatory results are not as good as expected.It is almost unanimous in the countries or regions with developed capital market to supervise the capital occupying from affiliated transactions in the way of regulatory administration and market-oriented governance. Regulatory administration focuses on the examination and approval in IPO and the disclosure of affiliated relationship of listed company, but market-oriented governance keeps the governance of affiliated relationship and restriction on majority shareholder as the soul of the governance system.In the recent several decades, because of the demerits of regulatory administration gradually exposed, developed countries accelerated the establishment of market-oriented governance system to restrict the majority shareholder, keep the balance of interest of the related parties, prevent the risk of capital occupying, provide remedies for minority shareholders, which has been received better effects than regulatory administration.In fact, the affiliated transaction is a kind of neutral act. It does not inevitably cause the negative result. Due affiliated transactions is as same as independent transactions and moreover with the function to decline cost. On the contrary, conflicts of interest in the affiliated transaction, being lack of supervision, will probably cause the moral risk of majority shareholder to make unfair deals. The capital occupying is the example of the abovementioned negative side of affiliated transactions. Therefore, it is the very problem to be researched hereinafter how to set up an effective legal regulatory method and improve the related legal system to balance the interest final by developing the positive side of affiliated transaction and prevent the occurrence of capital occupying.