On Interest Expropriation Of Major Shareholders In PROTRULY Co.,Ltd.

China's capital market has been established for nearly 30 years.As a young capital market,it has promoted China's economic development and provided a broad development platform for listed companies.Due to our special institutional background,the phenomenon of concentration of ownership structure in China is very common.On the one hand,such ownership structure can make the majority shareholder play more supervisory role on the management.On the other hand,it makes the interest conflict between the major shareholder and the minority shareholder more prominent.The too-concentrated ownership structure makes the majority shareholder have strong control over the company's operations,and has the favorable conditions and opportunities for encroaching on the interests of small and medium-sized shareholders and listed companies.Therefore,the conflict of interests between large and small shareholders has become an urgent problem to be solved in the operation and management of modern co mpanies.Combined with the actual situation in China,this paper analyzes the institutional background.Subsequently,based on the theory of principal-agent theory and information asymmetry,this paper takes PROTRULY Co.,Ltd as a case company,and combines the motivations,means and results of the behavior of encroachment,and conducts an in-depth study on the interests of the majority shareholder of PROTRULY.In terms of the motivation of interest expropriation,from the perspective of the internal governance of the company,Zhuang Min,the major shareholder in the case,has the highest shareholding ratio.So it is difficult for managers and other shareholders to form a check and balance to him.This has become the soil for breeding the behavior of interest expropriation.Besides,Zhuang Min is a director of the company.He expanded his power through several amendments to the company's policy.But it did not attract the attention of other members of the board of directors and the internal departments such as the board of supervisors,which laid the foundation for subsequent interest encroachment.Coupled with insufficient supervision of external laws and regulations,the quality of external audit is not high.These internal and external factors have jointly created favorable conditions for the interest expropriation of large shareholders.In terms of the means of interest expropriation,the major shareholder of the company instructed to submit false documents to inflate the valuation when it was listed,so that the shell company paid 128.9575 million shares than it should pay.After the listing,the major shareholder Zhuang Min,as the original chairman of the company,repeatedly revised the company's policy to expand its power,so that he can control the company's investment decisions and other matters.In addition,by leading a number of non-standard transactions,Zhuang Min uses funds such as accounts receivable,prepayments,investment,and non-compliance guarantees to gain his private benefit.After reading the public information,this paper finds that PROTRULY has the suspicion of concealing related parties.In many investment or illegal guarantee transactions led by Zhuang Min,the invested party or the guaranteed party are closely related to the major shareholder Zhuang Min.These violations are not only undisclosed,but even personally dominated by Zhuang Min's own decision.After these activities,PROTRULY not only faces operational risks,but also faces various litigation risks.The company's minority shareholders also get into trouble.Although the incident of interest expropriation of the major shareholders of PROTRULY is only a case of the capital market,it has a certain representativeness.By analyzing the cause and effect of the incident,it can play a certain reference role in curbing this negative behavior of the major shareholders.Therefore,based on these phenomena,this paper puts forward suggestions on three aspects: external supervision,internal corporate governance and small and medium shareholders' own rights awareness.It is necessary to continuously strengthen the construction of laws and regulations,improve the quality of external audits,and optimize the company's shareholding structure and improve internal governance.In addition,for small and medium-sized shareholders,they should pay more attention to the company's business conditions and changes,and should also unite to defend their own interests when their rights and interests are damaged.Such multi-faceted efforts can truly curb the interest expropriation actions of major shareholders.