The System To Control Private Benefit Of Control

Most enterprises in the world have the situation of ownership concentration whether in mature capital markets or emerging markets. The main large shareholder have absolute control over the company, they can use their control and influence of listed companies to take all means to seek benefits for themselves, and thus not only correspondingly undermined the interests of minority shareholders, but also seriously affected the healthy development of securities market. As deepening of research in the field of corporate governance, the behavior of large shareholders are concerned more than before. The core issue of corporate governance is changed from the traditional agency problem of shareholders and managers to the conflict of controlling shareholder and minority. In china, the high concentration of equity in recent years is result in the abuse of shareholder equity, emptying the listed companies, long-term occupation of resources of the listed companies, and serious damage to the interests of small shareholders. Therefore, the issue of private benefits of control and the establishment of appropriate restraint mechanism is very important, which is beneficial to further standardize and improve the governance structure of listed companies and to promote healthy and stable development of China's securities market.To some extent, the selfish nature of human lead to the question of private benefits of control, and the unique background in our country makes it more serious and complex. The motivation and paths of the major shareholder seizing control of private benefits could be various. The most direct way is the amount of funds used, including direct the funds occupy, the occupier through the loan contract and other violations cover guarantees and other forms, transfer assets through related party transactions, arbitrage through the use of access to inside information, and some other aids including preferences for equity financing and cosmetic performance. These are serious violations of the interests of other investors, affecting the development of China's securities market. Therefore, to propose a constraints so as to protect the legitimate rights and interests of small shareholders, and promote the healthy development of securities markets is important .The establishment includes the inner spiritual constraints and external environmental constraints (including the social environment, legal environment, institutional environment, market environment, etc.).