Research On Private Placement And Protection Of Small And Medium Investor

Since the reform of non-tradable share structure in China,private placement has entered the field of vision of major investment institutions and individual investors.It has quickly become a mainstream way of refinancing for major enterprises by virtue of its advantages of convenient government review procedure,simple required information disclosure and low equity cost.In order to better serve listed companies and activate the real economy,in 2020,the newly issued Rules for the Implementation of Listed Companies’ Non-public Offering of Shares lowered the threshold and restricted period of private placement.This makes the A-share market directional additional issuance times and financing amount began to increase sharply.Private placement can not only serve as a financing channel for enterprises,but also improve corporate governance structure and reduce operating costs.However,the ownership of major Chinese enterprises is relatively concentrated,and the ownership structure is mostly in the form of "one dominant share".In the actual operation process of private placement,the specific investors are also the controlling shareholders or related parties.In the process of issuing shares,the information of controlling shareholders usually precedes or exceeds that of small and medium investors.Information asymmetry has caused certain obstacles to the identification of private placement by regulatory authorities and small and medium investors.Therefore,under the new regulation of fixed increment with more relaxed policy,more attention should be paid to the protection of small and medium investors.In this context,we need to conduct further research on private placement and investor protection.Based on this,this thesis refers to domestic and foreign literature on private placement and investor protection,adopts the theory of information asymmetry,principal-agent theory,theory of control rights,and investor protection theory as the theoretical basis,and selects the case of Yi Jian private placement in 2015 as the object of analysis to analyze the problems existing in investor protection in this case.This thesis mainly studies the selection of pricing base date,annual report information disclosure,equity pledge of controlling shareholders to cash out,corporate governance structure,uses event study method to analyze the short-term announcement effect after the release of private placement plan,and analyzes the financial status of listed companies after private placement.The study found that Yijian shares in the initial establishment of the private placement of suspicion of infringement on the interests of small and medium investors.First of all,the pricing base date of the private placement is the announcement date of the board of directors,and the average price of its shares is the lowest,which reduces the subscription cost of major shareholders.Secondly,Yijian Shares set up a new company to expand the new main business,the new company is the implementation of the false business in the private placement;Then the use of the new company to open false business without commercial substance after the completion of the performance commitment,to carry out high dividends to divide the cash assets of listed companies;In the end,major shareholders pledged the additional shares in a short period of time,while transferring the risk,but also obtained a lot of income.The above behavior is that the controlling shareholder obtains a large number of stocks at a very low cost,occupies the funds of the listed company through false business activities,and finally cashed out by pledging restricted sale stocks at a high level,which seriously infringes the legitimate rights and interests of small and medium-sized investors.The above actions against small and medium investors also had serious economic consequences: since the private placement,the major shareholders have been using false business activities to seize the assets of the listed company,the financial condition of the listed company has been deteriorating,and the sustainability of the management has been questioned.Finally,the listed company was delisted in 2022.In combination with the characteristics of the case of Easy to see Shares,the following suggestions are put forward: first,increase the proportion of institutional third parties in the newly issued objects;Second,improve the status of independent directors and the board of supervisors in the governance structure;Third,small and medium-sized shareholder groups are introduced into the additional issuance objects;Fourth,minority shareholders should strengthen professional learning.It is hoped that the above opinions can provide some reference value for the regulatory authorities to formulate and improve the regulatory policy on private placement.