Cross-shareholding usually means that the parent company and subsidiaries hold absolute or relative control rights with each other, so that the parent company and subsidiaries can control each other's operations. The reason for this is that when the parent company increases capital and shares, the subsidiary company obtains the new shares of the parent company.
Cross-shareholding is prone to improper related party transactions (controlling shareholders and actual controllers), which damages the company's interests, and is not conducive to maintaining the independent legal person qualification of subsidiaries (the property rights of enterprises are vague, so it is difficult to form actual controlling shareholders, and the company managers replace the company owners to become the owners of the company and form insider control), which is not conducive to safeguarding the interests of small and medium shareholders (in related companies, the interests of small shareholders may be damaged by the will of large shareholders or holding groups, in terms of business opportunities and profit distribution, therefore, according to the law, When investing abroad, it must be voted by the relevant institutions (three associations), and the investment quota also has the right to limit. Therefore, we should strengthen the supervision and control of the business decisions of affiliated companies, protect voting rights and increase prudence.
There are three ways of equity swap in practice, namely, equity swap, equity swap+cash or assets.