A Case Study Of The Controlling Shareholders Of Fenghwa Using Entrusted Investment For Embezzlement

In 2021,the Shanghai Stock Exchange punished 33 listed companies and 232 persons in charge for the problem of illegal capital occupation,and promoted more than 70 companies to completely or partially solve the problem of capital occupation,involving an amount of more than 57 billion yuan.The problem of capital occupation by listed companies has become a chronic disease that negatively affects the healthy development of the capital market,seriously damages others interests,and even affects the effective allocation of capital market resources.In October 2020,the State council of the PRC issued the "Opinions on Further Improving the Quality of Listed Companies",in which it emphasized that the problem of capital occupation should be seriously dealt with,and various regions started a tough battle to clear debts and relieve security.Under strict supervision,the way of capital occupation is becoming more and more hidden,and capital occupation through entrusted wealth management is one example.The research on this phenomenon can enrich and supplement the research on the illegal capital occupation by the controlling shareholders of listed companies,and at the same time sort out the internal mechanism by which the large shareholders can use the entrusted wealth management to build the illegal capital occupation channel,and then identify and restrain the large shareholders from using the entrustment through these mechanisms.Financial management illegal funds occupation behavior.First of all,the article briefly introduces the current situation of capital occupation and the development of entrusted wealth management,and points out that there have been cases of using entrusted wealth management to occupy funds in current practice,and analyzes the motives and possible effects of entrusted wealth management,the causes and methods of capital occupation.As well as the strategies to suppress capital occupation,the research results of predecessors are sorted out,and it is pointed out that there is less research on the path of capital occupation using entrusted wealth management in the previous literature,thus emphasizing the research significance of the article.Then,on the basis of introducing the development history of Shanghai Fenghwa Group Co.,Ltd.and the general situation of Loncin,the paper analyzes in detail the path of Loncin’s use of entrusted wealth management to occupy the shares of Shanghai Fenghwa Group Co.,Ltd.and introduces the funds from the two aspects of market reaction and financial effect.The consequences of occupation,and the rectification measures of Shanghai Fenghwa Group Co.,Ltd.are sorted out.Secondly,analyze the reasons for the realization of this path from the company level and the external supervision level.Finally,according to the above analysis of the causes,it is concluded that establishing an effective internal control system is an effective way to prevent capital occupation,a sound corporate governance structure can help reduce the possibility of capital occupation,and broadening the channels for minority shareholders to exercise their rights is conducive to containment of funds.External supervision should link the illegal cost with the amount occupied and continuously improve the detailed rules for information disclosure of entrusted wealth management.The study of this case attempts to analyze and extract the characteristics of this path and its commonalities with other capital occupation methods by reviewing the incidents of illegal capital occupation by the controlling shareholders of Shanghai Fenghwa Group Co.,Ltd.through entrusted wealth management,so as to provide further solutions to the problem of capital occupation of listed companies.