Levels of supervision and law enforcement are advancing, and thousands of shareholders are finally compensated
In 2012, the Guangdong Bureau discovered during daily supervision that Z, the former chairman and general manager of a listed company in the jurisdiction, concealed the fact that company A had related relationships with multiple companies and conducted related transactions by carefully weaving a network of interests. Some of them were related companies. Established by his son. Company A’s 2009 annual reports, 2010 and 2011 interim reports, and annual reports did not disclose related parties and related transactions in accordance with the law, and related transactions that met the temporary announcement standards were not reviewed by the company’s board of directors and disclosed in a timely manner, which violated the relevant laws. Information disclosure laws and regulations.
In order to deter relevant illegal activities in a timely manner and prevent greater losses to the majority of shareholders, in July 2012, the Guangdong Bureau issued an "Administrative Regulatory Measures Decision" to Company A and its former chairman Z, to warn Company A and order it The company and Z make a public explanation. Company A subsequently issued an announcement, acknowledging that the company had omitted to disclose related parties and related transactions in its previous information disclosures.
Due to the serious nature of company A’s illegal activities, the relevant administrative supervision measures were not sufficient to punish it, and its legal responsibility must be investigated. In October of the same year, the Guangdong Bureau decided to formally investigate the company. Faced with factors such as the large number of persons involved and the long time span of violations, the Guangdong Bureau organized elite troops to overcome difficulties and speed up the pace. It took more than 100 days to complete all investigations and trials of the case. In March 2013, the bureau formally issued an administrative penalty decision to company A, deciding to impose a warning and a fine of 400,000 yuan on the company, and a fine of 150,000 yuan on a certain place of Z. At the same time, other executives or directly responsible persons were also separately imposed. Corresponding punishments were given.
Administrative penalties are not the end of the legal liability of listed companies. According to regulations, after a listed company has been punished for illegal information disclosure, shareholders can file a compensation lawsuit against the listed company for investment losses.
After the results of the administrative punishment on Company A were announced, a large number of shareholders began to contact the Guangdong Bureau to consult and prosecute rights protection matters. In order to effectively protect the legitimate rights and interests of investors, the Guangdong Bureau earnestly provided professional guidance for hundreds of investors in litigation and rights protection through telephone, and sent a public welfare message with the theme "Civil litigation is an important way for investors to protect rights" through the investor protection mobile phone information platform in the jurisdiction. Prompt information to guide shareholders to claim compensation from the infringer by appointing a lawyer or sue to the court on their own.
At the same time, the Guangdong Bureau notified the relevant courts of administrative penalties as soon as possible. The two parties repeatedly discussed the calculation of investor losses, the determination of relevant time points, and the impact of systemic risks; contacted relevant securities company professionals for development A software program for calculating the amount of compensation, thereby reducing the workload of accounting, and providing professional support for the smooth conclusion of the case by the court; timely interviews with the current executives of Company A, requiring the company to actively cooperate with the court to legally and reasonably resolve the demands of shareholders, and minimize the rights of shareholders cost.
According to company A’s announcement, from March 2013 to May 2015, more than 2,700 shareholders have filed a lawsuit in the court, claiming a total of 384 million yuan. As of June 2015, in more than 950 cases in which the court has made a final judgment, Company A has been sentenced to compensate shareholders for losses of more than 60 million yuan.
1. In this case, Mr. Z led the company's affairs for a long time, and later gradually relaxed its own requirements. He was lucky to not disclose the information that the company should disclose, which not only damaged the good reputation of company A in the capital market, and caused the company, I and the relevant responsible persons were punished, and the company was sentenced to bear huge compensation liabilities, leaving a taint of dishonesty in the securities market, and the lesson was profound. It is hoped that the controlling shareholders and actual controllers, directors, supervisors and senior management of listed companies will learn from this and learn and abide by the law, and never try the law by themselves, otherwise they will regret it.
2. The purpose of establishing the related transaction disclosure system of listed companies is to promote fair transactions and prevent the controlling shareholders, actual controllers, directors, supervisors and senior management of listed companies from using related transactions to transfer benefits. A prominent feature of this case is that some related transactions occurred between the listed company and the company set up by the company’s chairman’s son. The perpetrators conducted black-box operations by concealing related relationships and related transactions. It is difficult for related commercial transactions to ensure fairness and justice. After discovering the problem, the supervisory authorities promptly stopped relevant illegal acts, imposed punishments on those responsible, and gave the illegal offenders a bludgeon to protect the legitimate rights and interests of investors.
Continuously improve the equity structure and collectively select director candidates
At the beginning of May 2012, Company C issued an announcement that the chairman of the "exceeded service" will formally step down at the annual general meeting on May 25. At the same time, the company's board of directors will be re-elected, and the voting of director seats will adopt a cumulative voting system.
The company immediately notified major shareholders and institutional investors with large shareholdings, and suggested that all parties actively recommend director candidates. Subsequently, the actual controller nominated Y and other four candidates as the company's director candidates through the controlling shareholder. Among them, Y had previously served in banks and government departments and had just been airborne as the president of the company's controlling shareholder. The remaining three candidates have served in the company for many years. At the same time, a certain QFII and a public offering fund also jointly recommended director candidates. The media generally predict that Y will be elected as the general manager of the company and become the new head of the company after being elected.
The reason why various institutional investors participate in the governance of C company stems from the fact that the company has taken a variety of measures to continuously optimize the equity structure since 2005, and institutional investors have a greater say. First, the company has basically solved the problem of one-share dominance. The majority shareholder's shareholding ratio has gradually decreased from 50.28% before the share reform to 19.45% at the end of 2011, completing the transition from absolute holding to relative holding. The second is to introduce downstream distributors as strategic investors. The major shareholder transferred 10% of its shares to 10 core regional sales companies to realize the integration of interests with distributors. The third is to implement equity incentives. Major shareholders set aside 4.23% of the shares to implement equity incentive plans for the company's senior executives, middle-level cadres and business backbones. The above measures have tied the interests of the company, various shareholders and management together, which has attracted a large number of institutional and individual investors to hold long-term shares. The company's market value has increased by 12.3 times from 2005 to 2012.
At the general meeting of shareholders on May 25, most of the small and medium shareholders expressed the same question: “The majority shareholder holds only 19% of the shares, but recommends one-half of the candidates for directors. Airborne soldier Y has no corporate management experience. The company’s business is also unfamiliar, so as soon as I arrive at the company, I will serve as the managing director.
Sure enough, in the subsequent board re-election voting, investors actively exercised their rights and cast their votes for the director candidates recommended by institutional investors. The candidate was finally elected with a high vote rate of 113%, and the majority shareholder recommended Y A only got 36.6% of the votes in favor and was rejected. After the vote, the actual controller of the company demonstrated a good concept of the rule of law and an open-minded style, and clearly stated: "Respect the resolutions of this shareholders meeting. We believe that the new board of directors will correctly perform its rights and obligations."
1. Company C has a diversified shareholding structure. All shareholders negotiate with each other and put forward rational opinions on major decisions involving senior management candidates, profit distribution, investment and financing, and gradually form a good governance mechanism.
2. Listed companies should establish a fair and reasonable voting mechanism designed to reflect the wishes of small and medium investors. Company C stipulates in the company's articles of association that the cumulative voting system shall be implemented for the election of directors, which provides conditions for small and medium investors to exert greater voice.
3. The controlling shareholder of a listed company should be aware that although it is the single shareholder holding the most shares, it is not an absolute controlling shareholder in terms of the overall distribution of the company’s shares. Therefore, the major shareholder should respect and protect the independence of the listed company’s operation and governance, and respect The final result of the investor’s proposal for the company.