| Domestic capital market emerged in the early 1990 s and has a development history of more than 30 years.Many effective results have been achieved in the development process.The scale of capital market development is also growing.There are some irregularities.For example,major shareholders of listed companies deliberately misappropriate assets,making listed companies into financial crisis.Domestic listed companies usually have a centralized shareholding structure.In managing various business affairs of listed companies and making effective decisions,the discourse power of major shareholders exerts great influence.And major shareholders wait for opportunities to adopt illegal guarantees and related transactions.They misappropriating company property has brought serious consequences to the company.Through the analysis of the hollowing behavior of major shareholders,the consequences are reflected in the loss of interests of small and medium shareholders on the one hand,and the orderly development of the capital market is hindered on the other hand.At this stage,it is necessary to eliminate hollowing behavior from the root cause,and continuously improve the management ability and governance level of listed companies.Based on the above research background,the author adopts the case analysis method and qualitative and quantitative analysis method in the study of this topic,and analyzes the case of financial hollowing out of Europol Intelligent Network,which is a listed company.Since the listing of Europol Intelligent Network,it has been able to achieve the goal of economic benefits.However,in 2018,Europol Intelligent Network suffered a huge financial loss,and its loss was greater than the total profit obtained before,which also greatly impacted the investment confidence of investors.Chen Lihao,the major shareholder and actual controller,has absolute control over Europol Intelligent Network Co.,Ltd.He can effectively influence the operation and management activities of Europol Intelligent Network,as well as the selection process of directors and specific members of the supervisory board.In this article,the author sorts out the change process of the company’s equity structure,and analyzes the equity control chain built by Chen Lihao.At the same time,the joint relationship between affiliated companies and major shareholders was sorted out,and it was found that,in essence,the social capital control chain established by Chen Lihao mainly relied on the joint network of relatives,friends and other social relations.Taking this as the premise of the research,we traced the debt formation channels and impairment behaviors,and believed that Europol Intelligent Network had serious hollowing behaviors of major shareholders,and it showed the characteristics of persistence and secrecy.In the transaction activities of major shareholders involving the purpose of hollowing out,most of the transaction objects can be traced in the equity control chain or the social capital control chain,resulting in the net assets of Europol Intelligent Network being less than zero.And this company was gradually moving towards delisting.Therefore,it can be concluded that there are four specific methods for major shareholders of Europol Intelligent Network to embezzlement of listed company property: taking advantage of listed companies’ credit violations to provide guarantees,borrowing in the name of the company to illegally occupy non-operating funds,and cashing out company funds through hidden related parties’ receivables and prepayments in violation of regulations.,illegal transfer of company’s mortgage chattels.After in-depth discussion,this article believes that there are five main conditions for the realization of major shareholders’ hollowing out of Europol Intelligent Network: First,the deviation of control rights and cash flow rights leads to the existence of space for major shareholders to seize the private interests of control rights;second,the hollowing behavior of implicitly related parties transactions is secretive,and it is difficult to be identified;third,small and medium shareholders are not enthusiastic about participating in company decision-making,and they have an abnormal “free-riding” mentality;fourth,the penalties from external regulators are insufficient,relative to the benefits of hollowing out,the cost of breaching regulations for major shareholders to hollowing out is relatively low.Fifth,there is an imbalance in the internal governance of Europol Intelligent Network.The specific manifestations are as follows: There is a phenomenon of cross-employment and cross-shareholding between the directors,supervisors and senior executives of Europol Intelligent Network and related parties,it is difficult to maintain independence,and independent directors and supervisors fail to perform their supervisory obligations in a timely manner.The hollowing behavior of major shareholders has had a negative effect on Europol Intelligent Network and its related stakeholders.Compared with the industry level,in the case of the continuous decline of financial status of Europol Intelligent Network,there will be huge operating risks,guarantee risks,etc.The company suffered a delisting warning in 2019,and the company’s development capabilities are seriously threatened.Europol finally officially terminated listing in July 2021.The stock price of Europol Intelligent Network could not be maintained at a good level,and various financial indicators continued to deteriorate,resulting in large losses for the interests of small and medium investors.For creditors,they also suffered huge losses due to Europol’s deteriorating financial condition,which prevented it from repaying the principal and interest.This thesis starts from the two aspects of the company’s internal governance and external supervision,and puts forward corresponding countermeasures through case analysis.For the company’s internal: first,it is necessary to form a truly effective equity balance,maintain a reasonable range of shareholding ratios of major shareholders,and establish a diversified investment body;second,It is necessary to continuously consolidate the effectiveness of the supervisory role of the board of supervisors and independent directors,establish a scientific appointment and assessment system for independent directors,and consider the introduction of external supervisors to strengthen the effectiveness of supervision;third,let more powerful institutional investors act as representatives of small and medium shareholders,and allow small and medium-sized shareholders to unite.For the external supervision: firstly,improve the highquality information disclosure system,and pay more attention to the timeliness of information disclosure.The company has repeatedly disclosed information in violation of regulations,and a corresponding cumulative penalty mechanism should also be established for this;secondly,strengthen the supervision of invisible related transactions,and use modern technology joint supervision to improve the efficiency of supervision;thirdly,based on the actual situation of small and medium shareholders,build a sound legal system and protection mechanism to avoid their interests from being violated to the greatest extent possible.All in all,this thesis combines theory with practice,starts from the governance of major shareholders’ hollowing out behavior,adopts literature research method and case analysis method to carry out systematic analysis,and proposes effective solutions,which provides reference experience for listed companies with similar situations. |
