Study On The Major Shareholder's Tunneling Problem Of Qianli Company

In recent years,China's economy has developed at a high speed,the capital market has become more and more active,and the development of enterprises has become diversified.The external competition is fierce and many problems have arisen.Tunneling of the large shareholder based on the second type of agency problem is one of them.Since many of the listed companies' shareholding structure is characterized by “one big share”,the largest shareholder has controlled over the company and has a large chance of tunneling.The low cost of tunneling has prompted major shareholders to generate strong tunneling motives.It takes a series of means to occupy and transfer company funds and then shorten the company's assets.Such behaviors are common and have a negative impact on companies,stakeholders and capital market.Combining the case company to study the tunneling problem,meticulously exploring the motivations and means of tunneling,and summarizing the countermeasures against tunneling are of great significance to protect the interests of companies and small and medium-sized investors.This paper selects Qianli Company as a case company to study the tunneling problem of the company's major shareholder.Qianli Company is affiliated to the electronic video industry,listed in 2015 by the shell of Zhongda.In December 2016,it received the “Notice of Investigation” from the China Securities Regulatory Commission for suspected illegal information disclosure.The company's actual controller Zhuang Min and the concerted person Chen Haichang and others provided false agreements to the appraisal agency when they acquired Zhongda,which inflated the evaluation value of Qianli Electronics,damaged the legitimate rights and interests of Zhongda and its shareholders.In August 2017,Zhuang Min and the concerted person were subject to administrative penalties by the CSRC.After the listing of Qianli Company,it was invaded assets by the major shareholder.Nowadays,the company's business is in a semi-stagnation state,facing the dilemma of insolvency,multiple debts are overdue,and many litigation matters are riddled.On May 3,2018,the company was implemented by the CSRC to implement the delisting risk warning.On December 25,2018,the Shanghai Stock Exchange imposed disciplinary action on the company and related personnel.On April 26,2019,the company received the “Administrative Punishment and Market Prohibition Advance Notice” from the CSRC.Since May 24,2019,the company's shares have been suspended.So the case company is representative and time-sensitive.This paper uses the information of the board of directors of the listed company,financial report,announcement of the CSRC,and other key accounting subjects,using a combination of literature analysis and case analysis to study the tunneling problem of the company's major shareholder.Firstly,it introduces the basic situation of Qianli Company,the listing of the company's backdoor and tunneling of the major shareholder after the listing.Then it analyzes the motives and means of the major shareholder's tunneling,and finds that the company has raised a large amount of funds after the listing,and the major shareholder has the absolute control of the company,the high proportion of equity pledge,and the low cost of illegal activities have all affected the decision-making of major shareholders to a certain extent and become an important driving force for tunneling of the major shareholder.The major shareholder took advantage of the control right and adopted a series of means to encroach the company's assets,including the revision of the company's articles of association,the transfer of company funds through large-scale foreign investment and prepayments,the use of non-compliance guarantees and bad debts of accounts receivable,etc.Finally,the article proposes countermeasures against the tunneling behavior.The company should focus on improving the governance structure and strengthening internal control.The CPA,CSRC,legal department and other external regulators outside the company should perform their supervisory duties and make improvements in relevant aspects.The internal and external functions of the company will play a role in effectively restricting the behavior of the major shareholder,protecting the interests of minority shareholders from infringement,and maintaining the stable operation of the capital market.