Research On The Problems And The Strategies Of The~*ST Companies’ Restructuring

The stock market of China has developed for more than twenty years, and it is marked with Chinese style. The primal IPO of companies were drove by the shareholding reform in1980s, which was aimed at the formation and development of Chinese capital market. Most of the companies finished the procedure of IPO were transformed from the state-owned enterprises, they changed the form of their company with all their assets, and the assets were of different qualities, included many bad ones. With the boost of the capital market, the companies with the bad assets could not keep up with the speed of the macro economy, a lot of disadvantages appeared and reduce the development of their profit. Many companies could not keep their listing qualification because of the great loss lasted for three years, they were named as companies with special treatment, with was abbreviated as ST. In1993, the Bao’an Company Limited purchased the Yanzhong Company became the first practice of the restructuring of listed company in China, after1997, large amount of companies take advantage of restructuring to remain their listing qualification. And all the companies did not want to lose the listing qualification, they made use of the recombination to maintain the qualification under the pressure of new delisting policy.This study is based on reading large amount of documents and a good deal of researches of the current situation of the reorganization. The assets reorganization has many different patterns, for example:companies can go bankrupt first and then MA&restructuring, this method has the highest success rate and the best effect, and of course, it has become the most popular way which can help the companies get rid of the name of ST. The companies who were trapped into the financial distress all make their best to look for a restructuring party with high quality, in order to improve their financial condition. At the same time, the restructuring party always wants to get the listing qualification to broaden financing channels, and they are spare no effort to find a cost-effective public company. While the government also try best to accelerate the reorganization, they believe this can develop local economy. However, many problems appeared in the process of restructuring, such as lacking of effective supervisory system, lacking of a full fledged legal system and the defects of the corporate governance, all the problems cause the imbalance of the information in the market, which is good for the dominant stockholder make use of the reorganization to seek for excess earnings. The illegal connected transactions take place frequently, the restructuring even becomes the tool for shareholders to make their non tradable share into cash. All of the illegal actions damage most of the investors seriously, as well as the sound and steady development of Chinese capital market. In the end of the thesis, I pick the*ST Jiarui, which has finished the restructuring successfully nowadays as the example, and combined the case analysis method and the theoretical research method with each other, to put forward some practical suggestions to help to solve the problems appeared during the process of restructuring. and The suggestions are presented from various fields, like the government, the market and the company self.The study has combined case analysis and theoretical research with each other, on this basis, I explained the related theory about the reorganization and make a brief study on*ST Jiarui. This thesis can provide a fundamental basis for the following researches and provide a referenced basis for the government when they are establishing relative policies. Besides this, with deep study of how the companies make use of restructuring to keep their listing qualifications, the study can make suggestions on the restructuring in many different ways, and give advices on the protection of the right of minority shareholders,as well as the integration with two companies after the restructuring. Finally, we can realize the purpose to provide a salutary lesson for the listed companies who are trapped in the financial distress.