In view of the behaviors of controlling shareholders of listed companies that use listed companies to provide guarantees for them, which harms the interests of listed companies and other shareholders, China Securities Regulatory Commission has successively issued the Notice on Issues Concerning Guarantees Provided by Listed Companies to Others and the Notice on Issues Concerning Regulating Capital Exchanges between Listed Companies and Related Parties and External Guarantees of Listed Companies, stipulating that listed companies shall not provide guarantees for their controlling shareholders and other related parties. However, since then, the CSRC and the CBRC have issued the Notice on Regulating the External Guarantee of Listed Companies, canceling the provisions in the two notices prohibiting listed companies from providing guarantees for controlling shareholders. It can be seen from the above changes in laws and regulations that the regulatory authorities do not prohibit listed companies from providing guarantees for their controlling shareholders, but in the actual operation process, they still strictly fulfill the requirements of internal and external procedures. This is because the behavior of listed companies providing guarantees for their controlling shareholders has become the main means for listed companies to convey benefits to controlling shareholders, and some guarantee contracts are destined to become repayment agreements even from the date of conclusion. Coupled with the lack of corresponding preventive measures, once the controlling shareholder as the guaranteed party cannot repay the debt, the contingent liabilities of listed companies will be transformed into real liabilities. The essence of this kind of ATM guarantee is probably that the controlling shareholder of the listed company encroaches on the assets of the listed company through the guarantee provided by the listed company. This kind of behavior that the controlling shareholder indirectly withdraws the capital contribution from the listed company by way of guarantee, which greatly reduces the disposable capital of the listed company, can not help but remind people of "withdrawing the capital contribution". Generally speaking, shareholders' withdrawal of capital contribution refers to the behavior that shareholders transfer their capital contribution to individuals in some form. The current "Company Law" clearly stipulates that this kind of behavior is prohibited, but at the same time, the "Company Law" does not naturally recognize that providing guarantees for shareholders by listed companies is an act of withdrawing capital contribution. So how to standardize the behavior of listed companies to provide guarantees to shareholders, make them legal and compliant, and at the same time strengthen the prevention of guarantee risks of listed companies? Based on the above analysis and combined with the practice in the work, the author puts forward the following preventive measures: 1, relevant laws and regulations and the articles of association of listed companies can impose certain restrictions on listed companies to provide guarantees for controlling shareholders. Listed companies should be required not to provide unlimited joint and several guarantees to controlling shareholders, but only general guarantees. In this way, the listed company as the guarantor has the right of first appeal, and the guarantor can only assume the guarantee responsibility when the main contract is tried and the debtor's property is enforced according to law; 2. Improve the risk management organization system of listed companies and establish a strict guarantee system. The establishment of a strict guarantee system for listed companies is conducive to the board of directors to understand the development trend of related guarantee matters, effectively control possible risks and protect the legitimate rights and interests of listed companies and other shareholders; 3. Advocate small and medium shareholders to actively exercise and safeguard shareholders' rights, and promote listed companies to gradually move towards the track of optimizing governance and improving operations. When formulating the relevant guarantee system, we should fully consider the interests of minority shareholders and form an effective mechanism that is conducive to safeguarding their own rights and interests and preventing guarantee risks; 4. When a listed company provides guarantee for the controlling shareholder, it should establish a strong awareness of preventing guarantee risks and actively take effective measures. For example, the guarantor is required to provide counter-guarantee to listed companies with fixed assets, land use rights, shares or shares held by other companies, etc. ; 5. The board of directors of a listed company shall express opinions on whether providing guarantee for the controlling shareholder is beneficial to the listed company and fair and reasonable to all shareholders; 6. The independent directors and the board of supervisors of a listed company shall express their opinions on whether providing guarantee for the controlling shareholder harms the interests of the listed company and other shareholders; 7. Information disclosure requirements for listed companies to provide guarantees to controlling shareholders should be further improved. In addition to the detailed disclosure of the main contract and guarantee contract, it is also necessary to disclose in detail the financial status and credit status of the controlling shareholder, including assets and liabilities, profitability and previous bank credit records; 8. At present, the disclosure of the economic business of the controlling shareholder in the financial reports of listed companies in China is very limited, which mainly discloses the occupation and repayment of their funds, and only pays attention to the quantity, rarely discloses the reasons for occupation and hardly discloses the economic business. Therefore, we should increase the information disclosure of economic business by the controlling shareholders of listed companies, and fully protect the right to know of minority shareholders; 9. A listed company shall employ law firms, asset appraisal institutions, accounting firms and other relevant intermediaries to participate in the decision of providing guarantee for the controlling shareholders. Mainly lawyers review the subject qualification of the parties to the guarantee, the authenticity and legality of the main contract and the guarantee contract, the guarantee approval procedures, information disclosure, whether the guarantee method is reasonable, and whether the guarantee violates relevant laws and regulations, and issue relevant legal opinions. Only by strengthening prevention can we safeguard the legitimate interests of listed companies and other shareholders. (Xu of Beijing Law Firm)
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.