The motives and means of unfair related party transactions mainly include the following aspects:
Controlling shareholders use unfair related party transactions to manage earnings and "transport" profits to listed companies.
According to the relevant provisions of China's Securities Law, listed companies issue shares, issue additional shares, list transactions and bonds.
All need to reach a certain profit target. In order to help listed companies obtain financing qualifications or get rid of the labels of "ST" and "PT", controlling shareholders often achieve the purpose of "blood transfusion" for the latter through a series of unfair transactions with listed companies. The main means adopted include:
Buying, selling or transferring assets at a significantly higher or lower market price; Signing false purchase and sale contracts between affiliated enterprises or finally through a third party with affiliated enterprises to artificially raise the sales and profits of listed companies; Collect fixed returns in the form of entrusted operation or entrusted operation; Adjust profits by charging management fees and sharing the same expenses.
The holding company occupies the funds of the listed company and defaults on the payment for goods of the listed company for free. According to the provisions of the Securities Law, the funds raised by listed companies through stock issuance and rights issue shall be used according to the purpose of the prospectus. But the reality is that these funds are often used for other purposes by holding companies. Listed companies have become the "cash machine" of the parent company and the tool for the parent company to raise funds from the stock market. On the other hand, in the related transactions between listed companies and their parent companies, it is also very serious for the parent company to default on the payment for goods of listed companies without paying overdue liquidated damages.
Controlling shareholders often use their control power to transfer assets and profits from listed companies through an underground passage (that is, a "tunnel"), and finally "empty" listed companies.
The main means include: selling raw materials to the company at a high price and buying its products at a low price; The initial motivation of using abnormal pricing of related party transactions is to avoid tax when unreasonable intangible assets such as trademarks charge listed companies. Using related party transactions to transfer pricing to avoid tax, on the one hand, using the differences in tax rates and tax reduction and exemption conditions of different enterprises and regions, the profits will be
Transferred to affiliated enterprises with low tax rate or tax reduction or exemption; On the other hand, it is to transfer the profits of profitable enterprises to loss-making enterprises, so as to minimize the tax burden of the whole group. Economic Consequences of Unfair Related Party Transactions of Listed Companies The unfair related party transactions between listed companies and related parties violate the principles of fair market transactions and good faith, and the main consequences are as follows:
(A) is not conducive to the development of listed companies.
For interest-conveying related party transactions, although listed companies can create or maintain good business performance at a certain stage, small and medium shareholders seem to enjoy additional benefits from them. However, it also makes listed companies lose their market independence and rely too much on the support of affiliated enterprises, and their ability to resist external risks is weakening or even eventually lost. When major shareholders are unable to protect themselves and hold listed companies hostage, the performance of listed companies may fall into a trough at any time, or even suffer substantial losses. More seriously, when the controlling shareholder occupies a large amount of funds of listed companies, defaults on payment for goods, uses inferior assets to cash out in listed companies and transfers profits of listed companies, it has caused a fatal blow to the production and operation of listed companies.
(2) Infringe on the interests of small and medium investors.
Small and medium shareholders have little influence on the company's operation, and their interests are also the most vulnerable. For example, the parent company of a listed company uses its financing to cash out, and then transfers the funds out of the listed company through related party transactions after raising funds; Another example is that the parent company sells some of its assets to listed companies, regardless of whether these assets are beneficial to it; For another example, in order to ensure the distribution of shares, listed companies fabricate their performance by means of false sales and inflated profits, which is a deception and infringement on minority shareholders.
(3) Unfair related party transactions may infringe the interests of creditors.
A joint stock limited company is a typical joint venture company, and its assets are the only guarantee to bear external responsibilities. If the affiliated enterprises embezzle the company's assets or use the company to guarantee its debts through related transactions, the company's assets will be reduced or in a high-risk state, so that the creditor's rights will not be guaranteed.
(4) Causing the loss of state-owned assets.
After the original state-owned enterprises were restructured into joint-stock companies and listed, a large number of non-circulating state-owned shares were retained. In the wave of enterprise reorganization and mergers and acquisitions, the transfer of state-owned shares is a common way. In some property rights transfer transactions, the price is obviously too low, which will obviously damage the national interests and lead to the loss of state-owned assets.
In addition, some state-owned enterprises, as controlling shareholders, do not hesitate to sacrifice their own interests in order to package listed companies and improve their performance, and conduct blood transfusion related transactions with listed companies, which indirectly harms national interests.
(5) Causing the loss of state tax revenue.
Using related party transactions to transfer profits is a common means for enterprises to avoid taxes. If the profits are transferred from high-tax enterprises to low-tax enterprises through related party transactions, the overall tax revenue of the group will be guaranteed to be the lowest. This kind of behavior undoubtedly destroyed the country's tax system.
Causing the loss of national interests.
(six) endanger the healthy development of the securities market
Related party transactions are a "double-edged sword". Unfair related party transactions will harm the interests of the state, minority shareholders, creditors and listed companies themselves. More importantly, if unfair related party transactions are allowed to breed and spread, it will inevitably undermine investors' confidence and disrupt market order. If investors are hurt and lose confidence, the development of the capital market will be seriously affected, which is extremely unfavorable to the shareholding system reform of state-owned enterprises and the healthy and standardized development of China's securities market.