A Study On The Substantial Reduction Of Major Shareholders'stock And The Protection Of The Rights Of Small And Medium Investors

The issue of split share structure has hampered the development of China's capital market for many years,and non-tradable shares have acquired circulation rights through split share structure reform.The split share structure reform is a special product under the certain process of the development of China's securities market,and it is a short time from now.The problems caused in the foreign market are not available for reference.Since the restrictions on the sale of shares have been lifted,the reduction of major shareholders'stock has become a focus issue for people from all walks of life in the market.The reduction of shareholdings by shareholders is objectively their due rights and cannot be deprived of.However,the listed.companies frequently suffer from the phenomenal growth in performance before the reduction of major shareholders,and the decline in their shareholdings after the reduction.Due to asymmetric information,small and medium shareholders lack the expected judgment on the stock price,and the major shareholders are in an information superiority and have sufficient conditions to minimize their holdings.Small and medium investors have caused serious damage to their interests.In response to the phenomenon of major shareholders frequently reducing their shareholdings,the China Securities Regulatory Commission issued the"Several Regulations for the Shareholders and Supervisors of High-ranking Shares of Listed Companies" in 2017.Based on the previous shareholding reduction system,the China Securities Regulatory Commission mainly focused on emerging issues and new issues to make additional specifications.Although the new rules has been to some extent complete,but may still be imperfect,the interests of small and medium shareholders may still not receive strong protection,so it is worthwhile to study the reduction of major shareholders'stock of listed companies and the protection of the rights of small and medium investors.Based on the theory of equity theory,principal-agent theory,information asymmetry theory,and insider trading theory,this article uses the case study method,and on the basis of reviewing the relevant literature,taking the major shareholder of Yongda Group for seven consecutive large-scale "clearing" reduction events as the research object.The methods,characteristics,motivations and results of the reduction of the major shareholders'stock of Yongda Group were analyzed.Based on the theoretical analysis and the study of the case,it is found that there may be short-term motivation for the reduction of major shareholders of listed companies in China.The reduction of major shareholders'stock is related to the company's ownership structure,composition of the board of directors,financial status and information disclosure.The reduction of major shareholders'stock will cause certain negative market reactions,expose the non-standard capital market in China,and have a negative impact on the company's own operating performance,thus seriously undermining the equity of small and medium investors in the secondary market.The reason for Yongda Group successfully "reduce stock holdings to get cash" and harming the rights and interests of small and medium shareholders is that there are many practical factors to "support" it.To deal with these practical factors,this paper puts forward corresponding policy recommendations.If major shareholders are required to take corresponding responsibility for their actions and protecting the rights and interests of small and medium shareholders,it is necessary to constantly improve the system of reduction of major shareholders'stock,and also require companies to improve their internal control systems,strengthen supervision,and establish "small and medium-sized investments director"in the board of directors.It is also necessary to continue to improve the market information disclosure system and strengthen market supervision.And it is also necessary to gradually improve the stock issuance mechanism to balance the position of financiers and investors.And finally,strengthen the education of small and medium-sized investors to increase their awareness of prevention.It is also very important to guide their rational investment.