The Benefits Expropriation Behavior Under The Equity Pledge Of Controlling Shareholders On NEEQ

By the end of 2018,a total of 10,684 SMEs in China had chosen to be listed in the NEEQ market.The large number of enterprises improve the NEEQ market in many aspects.At present,in the NEEQ market,the status of the equity pledge is more important because the equity pledge can get financing without reducing the controlling.Nowadays,the equity pledge is second most important means for enterprises in the NEEQ.The characteristics of the NEEQ enterprises are the higher equity concentration and poor market liquidity.When the controlling shareholder also serves as the company's operator,the controlling shareholder tend to infringe the interests of the company and investors after the equity pledge.This paper will attempt to study the reasons,behaviors and influences of the controlling shareholder of the NEEQ enterprises in encroaching on the company's interests under the equity pledge.This paper chooses the case study method,taking the NEEQ enterprise Feng Shengyang as the research subject to do a deeper exploration of this issue.It is found that the separation of control rights and cash flow rights under equity pledge is the main reason for controlling shareholders to invade the company's interests.In addition,the equity pledge can reduce the cost of the encroachment.Besides,the irregularity of the internal control and the external supervision,the pricing difficulties,and the low shell value strengthen the encroachments.At the same time,the Non-independent Board of Directors and the loose external supervision have deteriorated the phenomenon.Judging from the means of encroachment,it usually uses the related guarantees,related transactions and capital occupation to draw on the interests of the company.At the same time,the risk event of the equity pledge of the NEEQ has in turn worsened the equity pledge financing environment of the SMEs.In order to protect the interests of the pledgee and the small and medium shareholders,and solve the problems of the equity pledge financing of the NEEQ enterprises,the paper offer regulators some suggestions in various aspects.