First, the concept of cross-shareholding.
The so-called cross-shareholding, also known as cross-shareholding or cross-shareholding, refers to a joint form in which companies hold a certain proportion of each other's shares through mutual investment, mutual support and mutual inhibition. Therefore, mutual shareholding between companies is essentially reinvestment between two or more enterprises. It should be noted that in non-joint-stock companies and enterprises, the contribution of investors is not called "shares", so the mutual investment between them and between them and joint-stock companies cannot be called "mutual shareholding", and its essence is the same as that between joint-stock companies.
Second, the advantages and disadvantages of cross-shareholding
Benefits of cross-shareholding:
1, which is conducive to consolidating the management right and promoting the company's long-term investment. Companies holding shares with each other will form the connection between companies with shares, so that unrelated companies will be closely linked together, forming a situation of sharing weal and woe and sharing benefits.
2. It is conducive to reducing the company's business risks. Through mutual shareholding, companies form strategic alliances, thus further maintaining and promoting their business cooperation.
3. It is conducive to resisting hostile takeover and enhancing the company's retained funds. In the case of mutual shareholding, companies depend on each other, penetrate each other and restrict each other, forming "the same body and the same life" to a certain extent, and mutual trust based on certain agreements or contracts can prevent the free flow of shares.
Disadvantages of cross-shareholding:
1, three principles of inflating company capital and endangering company capital. Capital truthfulness is the basic principle of modern company law, which is embodied in three principles: capital determination, capital maintenance and capital invariance. However, the phenomenon of mutual shareholding between companies will lead to the hollowing out of company capital.
2. The corporate governance structure loses its checks and balances, which easily leads to the consequences of insider control. In this way, the real investor shareholders are excluded from the shareholders' meeting, their shareholders' rights become nominal, and the decision-making power of the shareholders' meeting is controlled by the operators.