I related party transactions
(1) definition
Article 31 of the Detailed Rules for Information Disclosure of Listed Companies in the National Small and Medium-sized Enterprise Share Transfer System (Trial) stipulates that the related transactions of listed companies refer to the transfer of resources or obligations between listed companies and related parties. According to Article 10. 1. 1 of the Listing Rules of Shenzhen Stock Exchange, related party transactions refer to the transfer of resources or obligations between listed companies or their holding subsidiaries and related parties of listed companies. Therefore, the definition of related party transactions refers to the transactions between the company or its subsidiaries and the related parties who directly or indirectly hold interests and have interests in the company.
The main difference between related party transactions and ordinary transactions is that the former is a transaction between parties with specific related relationships. Related parties include natural persons and legal persons, mainly including promoters, major shareholders, directors, supervisors, senior managers and their families and the companies they hold.
(II) Identification and requirements of the New Third Board for related party transactions
1. How to identify it as a related party transaction?
Article 32 of the Detailed Rules for Information Disclosure of Listed Companies in the National Small and Medium-sized Enterprises Share Transfer System (Trial) stipulates that the related parties and related relationships of listed companies include the situations stipulated in the Accounting Standards for Enterprises No.36-Disclosure of Related Parties, and the situations identified by listed companies, lead brokers or national share transfer system companies in accordance with the principle that substance is more important than form. For the identification of related parties, the current audit attitude of share transfer companies is that the related parties of the company can be determined according to the company law and accounting standards, without reference to IPO standards.
2. Regulatory requirements
Related party transactions are allowed to exist under certain conditions, and the basic attitude of regulatory authorities towards related party transactions of companies is to reduce and standardize them. Related party transactions existing in the company must meet the following conditions:
(1) The entity shall meet the requirements of market-oriented pricing and operation, and the transaction price and conditions shall be fair;
(2) In terms of procedures, we must strictly follow the provisions of the articles of association and the corresponding systems;
(3) It cannot affect the independence of the company in quantity and quality;
(4) Related party transactions must be disclosed.
(iii) Solutions
Related party transactions do exist in the company and should be handled and resolved. Before listing, the company should take the following measures to deal with related party transactions according to its own situation, so as to successfully realize listing:
1, topic disassociation
The main methods are: transferring the equity of the company with related transactions to non-related parties, reorganizing and merging the matters involved in related transactions, liquidating and canceling the related enterprises that have stopped operating, have not actually operated or whose existence may cause obstacles or adverse effects on the company's listing, and setting up subsidiaries to complete the business of the original related parties;
2. Business separation
That is, purchase assets, channels and other resources corresponding to related party transactions and incorporate them into the company's business operation system;
3. Legalization of procedures
That is, the related party transactions are approved and voted in strict accordance with the company's articles of association and company system;
4. Fair price
That is, prepare enough evidence to prove that the transaction price follows the market pricing mechanism;
5. Information disclosure norms
Strictly abide by the information disclosure norms and disclose the related party transactions in the last two years, as follows:
(1) According to the nature and frequency of transactions, disclose related party transactions and their impact on financial status and operating results, and disclose them according to frequent and accidental factors;
(2) To disclose whether the articles of association stipulate the decision-making power and procedures of related party transactions;
(3) disclose whether the related party transactions have fulfilled the procedures stipulated in the Articles of Association, whether the review procedures are legal and whether the transaction price is fair;
(4) Related party transactions shall be disclosed by related party and transaction type respectively;
(5) Disclosure of the measures to be taken to reduce related party transactions.
Third, horizontal competition.
(1) definition
The so-called horizontal competition can draw lessons from the definition in the Memorandum of Standards for the Examination of Stock IssuanceNo. 1 which has expired: horizontal competition refers to all natural persons or legal persons who directly or indirectly control the company or have significant influence on the company and their controlled legal entities engaged in the same or similar business with the company. Therefore, horizontal competition means that the controlling shareholder, actual controller and other enterprises controlled by the issuer engage in the same or similar business as the issuer, so that the two parties constitute or may constitute a direct or indirect competitive relationship.
(II) Identification and requirements of competition in the New Third Board industry
Between two companies with horizontal competition, especially between two companies with controlling and controlled relationship, the controlling shareholder or actual controller can arbitrarily transfer business and business opportunities, which is easy to harm the interests of the controlled company and investors. Therefore, in order to protect the interests of listed companies and investors who are mainly small and medium shareholders, horizontal competition is strictly prohibited in the capital markets of many countries.
If an enterprise conducts an IPO, there is no horizontal competition between the issuer and its controlling shareholder, actual controller and other enterprises controlled by it, which is one of the basic conditions for the enterprise to go public. At present, the New Third Board does not strictly prohibit horizontal competition, but it is believed that the restrictions on horizontal competition will become more and more strict in the future. Therefore, enterprises should avoid horizontal competition as much as possible when listing.
1. How to identify it as horizontal competition?
From the practical experience, the regulatory authorities usually pay attention to the following aspects when judging whether there is horizontal competition between the company and its competitors:
(1) Investigate the sales area or sales target of products or services. If there are factors such as geographical distance of the sales area and different sales targets, even the same product or service may not necessarily have business competition and conflict of interest;
(2) If there are subdivided products, we can examine whether there are significant differences in product production processes. If the products of the company and competitors belong to a large category of industries, but there is product segmentation, then the production technology between them will also become an important aspect to investigate whether there is horizontal competition;
(3) Investigate the characteristics and operation mode of the company's industry. Sometimes, in specific cases, the regulatory authorities will combine the characteristics of the industry in which the company is located and the business operation mode to determine whether it constitutes horizontal competition.
2. Regulatory requirements
As mentioned above, there is absolutely no horizontal competition in the IPO of enterprises. In view of the fact that there is absolutely no horizontal competition in IPO, the company to be listed must completely solve the problem of horizontal competition before applying for listing. At the same time, relevant entities also need to make appropriate arrangements and commitments according to specific conditions to avoid horizontal competition.
The attitude of the share transfer company to the peer competition audit is not to make a one-size-fits-all approach, and try to rectify or put forward rectification measures according to the specific situation. If it is really difficult to solve, it is necessary to disclose the facts and pay attention to them in the subsequent continuous supervision process. Of course, as mentioned above, lawyers should try their best to solve the problem of horizontal competition when providing services.
(iii) Solutions
If there is horizontal competition, it is a big obstacle to listing. Therefore, if it is judged that the company has horizontal competition, various measures must be taken to solve it, as follows:
1, acquisition and merger
Acquisition of equity and business of competing companies in the same industry from companies to be listed or subsidiaries of companies, and absorption of merged competing companies, etc. ;
2. Transfer of equity and business
The competitor transfers the existing competitive business or company equity to an unrelated third party;
3. Suspension or cancellation
Directly cancel competitors in the same industry, or competitors change their business scope and give up competitive business;
Step 4 make reasonable arrangements
If a market segmentation agreement is signed, the market area of the company to be listed and its competitors can be reasonably divided, or the product variety or grade can be divided, or the different production or sales stages of the product can be divided, or the business that is competitive with the company to be listed can be entrusted to the company for operation;
5, multi-angle detailed explanation of the industry but not competition.