What is unfair related party transaction? What are its hazards?

The so-called unfair related party transaction refers to the behavior that the related party in a controlling position violates the principles of fairness, legality, honesty and credit, abuses the control and influence relationship between the two parties to the transaction, harms the interests of other unrelated parties through the transaction, and embezzles the property of the listed company.

There are many common ways of unfair related party transactions, such as the trading conditions of buying and selling tangible assets are obviously higher or lower than the usual conditions, the price of purchasing or realizing equity is obviously higher or lower than the usual trading price, giving up or delaying the exercise of equity, creditor's rights and other property rights of related parties, giving up due business opportunities or giving up or sacrificing the interests of listed companies for the benefit of related parties, and charging fees for providing comprehensive services is obviously higher or lower than national, local and industry standards.

Unfair related party transactions, the transaction results are unfair in essence, because related parties take advantage of the "close relationship" with listed companies, and listed companies "suffer losses" in this transaction, which leads to the loss of the interests of listed companies, thus leading to the loss of the interests of small and medium investors. Improper related party transactions will not only endanger the independence and asset integrity of listed companies, damage the interests of small and medium investors, but also adversely affect market development. Therefore, the current laws and regulations stipulate that "the controlling shareholder, actual controller, directors, supervisors and senior managers of the company shall not use their related relationships to harm the interests of the company", that is, unfair related party transactions are explicitly prohibited.