Research On The Encroachment Behavior Of Controlling Shareholders Under Equity Pledge ——A Case Study Of Antong Holdings

As a financing method,the biggest advantage of equity pledge is that it can convert static book interests into dynamic available funds to meet the financing needs of shareholders without weakening their control.On the contrary,the high proportion of the controlling shareholder’s share pledge will increase the degree of separation of their control and cash flow rights,resulting in an increase in the motivation for interest encroachment,and at the same time,the separation of the two rights will reduce the cost of the controlling shareholder’s encroachment and make it obtain excess control gains,so the equity pledge has gradually become the prelude to the implementation of interest encroachment by the controlling shareholders of many listed companies.Antong Holdings’ controlling shareholder,Guo Brothers,has been continuously carrying out frequent and high-proportion equity pledges for its personal financing since its backdoor listing,after which the company’s stock price fell,the pledged shares fell below the early warning line and the closing line,facing the risk of collapse,in order to alleviate the debt crisis,the Guo Brothers encroached on the interests of listed companies through illegal appropriation of funds and illegal guarantees without the approval of the shareholders’ meeting and the board of directors,resulting in Antong Holdings falling into a financial crisis and having to carry out asset restructuring.The small and medium-sized shareholders suffered heavy losses,and the parties also received penalties from the CSRC.After case analysis,it is found that with the continuous improvement of the pledge ratio,the two rights of the controlling shareholder are extremely separated,the agent conflict is stimulated,and the circular pledge has recovered part of the investment cost,thus increasing the opportunity for the controlling shareholder to encroach on the interests.The smooth implementation of the embezzlement by the controlling shareholders is also closely related to the unreasonable ownership structure of the company,the controlling shareholders exceeding the decision-making procedures,concealing the disclosure of major matters and the weak supervision of the external regulatory authorities.Therefore,the company needs to implement the new pledge regulations,strengthen the disclosure of equity pledge information,and build an external supervision system Strengthen the punishment for violations,optimize the equity check and balance structure,improve the independent director system of listed companies,and establish the tracking evaluation of the company’s internal audit to further protect the interests of the company and the rights and interests of minority shareholders.