Evaluation Of Cases Of Equity Holding By Listed Companies

Since 2018,China has entered the stage of strong supervision in the financial sector.In the Yang Jinguo and Lin Jinkun equity transfer dispute case,the Supreme People’s Court found the illegal equity holding agreement of the listed company as invalid,marking the beginning of judicial adjudication in response to the policy requirements of the state’s strong supervision,and also means that the rules of the CSRC and other relevant regulatory departments have begun to become the basis for determining the validity of the listed company’s equity holding agreement.However,the absence of legal norms makes the solution of such problems quite divergent in both doctrine and judicial practice.Chen Linsen and Shen Yujiang three judicial cases,including the dispute over the confirmation of shareholder qualifications,are typical representatives of such cases,which fully reflect the controversial issues that prevail in judicial practice at present.Among them,the focus of the dispute is: how to determine the existence of the listed company’s equity nominee holding relationship in the case,the validity of the listed company’s illegal equity holding agreement,who owns the nominee shareholding,and how the appreciation or depreciation generated by the nominee shareholding should be distributed.In the absence of a written agreement,only the actual capital contribution is not enough to determine the establishment of the equity nominee holding relationship of the listed company,and it is also necessary to focus on whether the parties have reached a nominee agreement.One-sidedly advocating that the agreement is invalid or valid may inhibit the enthusiasm for financial innovation,and may also encourage investors’ arrogance to "violate the law".The determination of the validity of the nominee holding agreement should be treated differently on a case-by-case basis,and the time of formation of the nominee relationship and the nature of the nominee agreement are not the main factors in determining the validity,and the court should focus on examining the proportion of the nominee shareholding,the reasons for the nominee holding,and the identity of the nominee holding entity.In the case that the nominee holding agreement is valid,due to the special nature of the stock,the nominee shareholder cannot transfer the nominee shareholding to the actual investor,at which time the actual investor can decide when to sell the stock and get back the investment principal and income.If the nominee holding agreement is invalid,in principle,the nominee shareholding right should belong to the nominee shareholder,but it should return the capital and benefits to the actual contributor.The court should also focus on the degree of fault of the parties based on the principle of fairness,and comprehensively distribute the profit and loss according to the degree of value-added or devalued contribution of both parties to the nominee shareholding.In order to balance the interests of nominee shareholders and actual investors,the exercise of equity by nominee shareholders should be restricted,and at the same time,relevant departments should be called on to introduce policies to confiscate the proceeds of illegal holdings for the protection of the legitimate rights and interests of small and medium-sized investors.