The Interests Encroachment Under The Equity Pledge Of Major Shareholders

With the development of the current market environment,the structure of company's shareholding has shifted from decentralization to concentration.The second type of principal-agent problem which between major shareholders and small and medium-sized shareholders has gradually replaced the first type of principal-agent problem which between shareholders and management,becoming a core problem of corporate governance.Compared with small and medium-sized shareholders,major shareholders who hold most of the company's equity are more likely to use their own major shareholder privileges to encroach on the company's interests.In recent years,equity pledges have been regarded as excellent financing methods by major shareholders because of their strong liquidity and cashability,and they are extremely active in the capital market.Through the equity pledge,major shareholders,not only into the capital,but also maintain the right of control over the listed company.However,domestic and foreign scholars have shown that after the equity pledge,the risk of fluctuation of the company's equity value has transferred from the pledgor to the pledgee.Therefore.this paper selects the equity pledge of the major shareholder of the listed company as the entry point,taking the "the poorest listed company in history"——*ST Huaze,which has received much attention in 2018,as an example,and carries out the interest encroachment after the pledge of the equity of*ST Huaze's major shareholder.In-depth study of the ways in which major shareholders engage in the invasion of interests and the consequences of the invasion of interests,find problems and propose countermeasures.This paper first summarizes relevant literatures at home and abroad and related theories,laying a theoretical foundation for the article.Then it introduces the institutional background and market status of China's equity pledge,and points out the practical significance of the research content.Afterwards,the main part of the article explores how the major shareholder will encroach on the listed company from the non-operating capital occupation and related guarantees of the related parties,and analyze the consequences of the interest encroachment after the pledge of the shareholding of the major shareholder.Finally,some suggestions are given for the problems in this case from both the company itself and external supervision.