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Related party transactions of listed companies in China financial securities papers _

improper related party transactions of listed companies in China are prevalent, there is the trend in recent years. These related party transactions are characterized by ever-changing form of the purpose of profit manipulation, outstanding performance in some sectors. Improper related party transactions of listed companies, investors, the stock market will cause serious damage. The main reason is the equity structure of listed companies are too centralized, internal and external governance structure is imperfect, and the lack of relevant laws and regulations. Specifications of related party transactions focus on strengthening the audit, improve the corporate governance structure, due to the dominance training intermediaries and solve problems. Related party transactions is a company or its subsidiaries and the company has an interest, directly or indirectly, a stake in the related party transactions carried out between. In foreign countries, related party transactions in the multinational parent company system and the total branch occurs when the system is widely used in the. In Western countries, related party transactions are often used to reduce transaction costs and a reasonable tax avoidance. Some family businesses in Asia and the government-run enterprises, the related transactions are used as the transfer of profits between parent and subsidiary or hide losses. In China, because of related party transactions monitoring system is not perfect, there were many listed companies in an unfair situation of related party transactions, and to maliciously manipulate profits, resulting in serious consequences. Existing laws and regulations on disclosure of related party transactions only on (in fact, such disclosure is incomplete), and the fairness of their trading is not for judges, but also not to interfere, which makes the case of abuse of the continuous development of related party transactions, prevent the stock market and the healthy development of listed companies. This article will explore the status of related party transactions of improper influence and causes, and on this basis, measures to resolve the issue. A listed companies in China and features of the status of related party transactions related party transactions are prevalent in our listed companies, the majority concentrated in the listed company and its parent company, or between other subsidiaries under the parent company between. In recent years, the connected transactions of listed companies from the developed to the purchase and sale of shares associated with the transfer and replacement of assets, from the development of tangible assets to intangible assets trading transactions, many forms,[link widoczny dla zalogowanych], intensified. According to statistics, in 1997, Shenzhen and Shanghai 719 609 listed companies in the disclosure of related party transactions in different degrees, listed companies accounted for 84.6% of the total number of homes in 1998 compared to 80%. In 2000 this proportion had reached 93.2%, showing a significant upward trend. In recent years, a number of related party transactions have the following characteristics: 1. Transactions in the form of ever-changing related party transactions in the year 2000, there have been many new trading forms: (1) behavior associated with reorganization of listed companies directly expressed as a gift, especially for less than net asset value per share ST's 1 per gift. For example, Jinlikeji asset replacement and major shareholders, the excess part of 219.98 million yuan of assets placed by the major shareholders of listed companies free gift. The company has net assets per share of -0.496 from 1999 to 2000, 1.89 million yuan. The purpose of this is simply listed as soon as possible to achieve (2) occurred in the past few delegated more and more common, Chongqing, Hong Kong, Kowloon Shenma Industrial, colored Xinguang, Mount Emei, public technology companies, related party assets entrusted with the operation and get better returns; other listed companies low-quality assets will be entrusted to the related party business, to eliminate the potential loss of business factors. (3) the emergence of the trademark rights associated with intangible assets, mainly, for example, Xiamen Overseas Chinese Electronic,[link widoczny dla zalogowanych], MACRO, Mailyard, Yue Hongyuan companies such as the amount of the transfer of trademark rights in billion yuan. In which Xiamen Overseas Chinese Electronics and Yue Hongyuan the trademark transfer was finally 2. The phenomenon of earnings manipulation was Sun Zheng and Wang Yuetang (2000) study results show that the existence of listed companies in general, manipulation of the tendency of net return on assets, profit and loss of motivation of its direct manipulation from the regulatory authorities with the placement policy, particularly to address policy and delisting policies. Dongjun Li and Yu Jing (2001) also pointed out that there is a minimum value as long as the legislation demands fell on the point of extremely large enterprises. March 1999 Commission on the allotment conditions were amended to provide annual ROE of not less than 6%, 3-year average of not less than 10%. Results 1999 420 listed companies, ROE in 6-8% of the company for 1997 and 1998, 24 and 25, worry about increased to 67; and ROE in 1997 and 1998, a 6% 5% companies from 15 and 17, reduced to 3. This manipulation of the specific ways: (1) a , the agreement implemented by the book value of replacement, the company to eliminate a potential loss factors. (2) custody management, contract management, short-term lease from a related party to obtain a stable income. (3) the acquisition of major shareholders by surprise under the high-yield assets increased profits of listed companies. For example, compression refrigerator in 2000 to $ 1 per share price of the purchase of a 50% stake in joint venture to form a 72.58 million yuan of revenue sharing within a certain number of years in the future, the company recorded profits. (4) associated with the direction of the funds of listed companies to pay high occupancy costs. 3. Substantial income from related parties, a lot of money also flow to related parties the one hand, some listed companies to sell products related parties to provide services income has become their main business an important source of income. 2000 statistics showed that in the published annual reports of 1018 listed companies, listed companies and 488 sales to its related party goods or services, the total amount of 121.758 billion yuan. Of these, 116 associated sales of its main business income of more than 30% share, with 61 more than 50%. On the other hand, related party transactions by listed companies will be a lot of money into the Related Party. In 2000, listed companies in 1018, has 425 affiliates to buy their raw materials and labor services, the transaction amounted to 115.35 billion yuan. One of its main raw material for 99 to 30% of business costs, there are 43 more than 50% the proportion of listed companies related party lease land use rights,[link widoczny dla zalogowanych], trademark rights, production facilities, extensive use of the right to exist. For example, Wuliangye trademark rights to the use of large shareholders of 93.18 million yuan for one year. 4. Guarantee Funds and the phenomenon of conspicuous 2000, at the 1018 listed companies, there are 844 existing receivables and payables to related parties balances. Among them, the Liaohe oil field 100% of the balance of receivables from related parties; and Yunengkonggu accounts payable balance 96.7% is a related party. Associated with receivables totaling 82.8 billion yuan, while the associated total 23.7 billion deal, which to some extent that funds of listed companies related parties the phenomenon is more evident. 5. Obvious characteristics of related party transactions industry statistics show that sales activity in 2000 occurred in the highest frequency of related party transactions are electricity, gas, mining, petrochemical and heavy industries of utilities, procurement activities related party transactions occurred in the frequency the highest extractive industries, petrochemical and other heavy industry and raw materials manufacturing. Most of the enterprises within these industries are capital-intensive enterprises, the production process complex, large-scale assets. Restructuring and listing, due to the amount released by the time constraints, only part of the assets of its listed companies as the core of the restructuring, resulting in the For example, related party transactions in the petrochemical industry more serious, the main operating costs associated with the proportion of purchases accounted for more than 90% of the Chinese Phoenix in 2000 (92.1%), Wuhan Petroleum (93.8%), Liaohe Oilfield (97.2%) , Yueyang Xingchang (90.8%), Zhongyuan Petroleum (94.1%), Hubei Xinghua (94.2%) and Samsung Petrochemical (97.4%), seven; associated proportion of total sales revenue of more than 75 primary % are Danyoutaiming (82.1%), Jinzhou Petrochemical (78.3%), Dan Lianhua (78.3%), Liaohe Oil Field (100%) and Hubei Xinghua (75.6%) five. Second, our related party transactions of listed companies general, related party transactions pros and cons, but a large number of listed companies in China related transactions to hide many problems, many related party transactions are related party transactions are not fair. That a listed company with related parties carried out by fair result in listed companies, investors, the market damage. Damage to listed companies mainly in the following areas: (1) over-reliance on related parties listed companies, for example, some companies whose main raw material procurement and product sales to related parties were the subject of its operational autonomy subject to many restrictions. (2) A listed company guarantees to related parties, loans and capital is far greater than the number of listed companies associated with the direction and amount of money to provide security, greatly increased the listed company's financial risk. For example, before 1995, a blue chip company ST Monkey King still experienced losses of 0.20 yuan per share in 1999, the 2000 loss in only 1 cent per share, timekeeping, and the carrying amount of debt is only 62%, ST monkey Wang's situation seems not too bad. However, after a lapse of six months, the Monkey King Group filed for bankruptcy, which makes the Monkey King Monkey King A group of 890 million yuan and 244 million secured debt faced huge exposure to bad debts, only 934 million yuan of total assets of the Monkey King A due insolvent, will be in danger of being delisted. Unfair related party transactions of the investors have significant adverse effects. The major shareholder in the holding position of advantage to use the right to vote on related party transactions of listed companies to make arrangements. If they seek is the controlling shareholder of the additional benefits, which are often at the expense of the overall interests of listed companies at the expense, of course, many will be against the interests of small shareholders. Listed companies use transfer pricing to shift profits to related parties; the company through related party transactions for the procurement of goods and services to pay more money. These will lead to decline in corporate profitability, financial risk increased. For example, prior to the listing of shares related commitments of aluminum the second quarter of 1999 dividend to all shareholders, but the company in 1998 in the funds, so temporarily for the distribution of profits. Occupation of company funds by controlling shareholders of listed companies which led overthrow of commitment, which is nothing short of deceiving investors. Again, ST 1992 network should have to pay a sum of 4,414,800 yuan of capital in 1999, timekeeping has not yet published in place. ST outlets nominal majority shareholder holding 22% stake, but the actual investment for less than half, while the ST outlets have repeatedly picking, dividends and increase, the major shareholder relying on the false capital enjoy more benefits. This is a clear violation of the rights of minority shareholders. Related transactions unfair negative impact on the market mainly in the following two aspects: (1) from the market regulator's point of view,[link widoczny dla zalogowanych], the existence of related party transactions with related parties to the capital of listed companies to offset each other, resulting in false capital, share monopoly and lack of transparency in business and other defects. Fang Huili associated with their access to information on the listed company's advantage in the secondary market, insider trading, manipulation of. The listed companies and transfer pricing between related parties will damage markets, the role of efficient allocation of resources. (2) from the perspective of market intermediaries, the intermediaries are often involved in related party transactions, the burden of the assessment of the transaction, auditing, legal and other duties, if the related party transactions are too complicated, concealed, or trade their intention to fraud, and the results will lead to For the practice of agencies face enormous risks. For example, the original source of the company Joan people are gains of 5.4 billion and 6.57 billion of new capital fund obtained through related party transactions, but because of the complexity of related party transactions and internal controls, audit tests of the restrictions, registration Accountants did not identify audit of related party transactions which led to failure by the government authorities punished. Three listed companies in China mainly due to related party transactions fundamentally unfair related party transactions was the result of inadequate corporate governance structure of listed companies,[link widoczny dla zalogowanych], the regulatory measures are not relevant Complete caused. Specifically, has the following main reasons. 1. Ownership structure of listed companies too concentrated ownership structure of listed companies in China is very special, most of the state shares, legal person shares and public shares of three parts, of which most of the total share capital of the state shares and legal person shares can not flow. Therefore, most public companies listed in name, in fact, the controlling shareholder of the company. Therefore <DIV class=