The Research Of Reverse Merger Of Securities Companies In China

As the booming of the Chinese domestic stock market from 2006, most securities companies' turnaround from that time and some of them even made huge net profit. Not only those innovation and pilot securities companies, even more securities companies are qualified to make profits continuously in the stock market. This makes it possible for more and more companies enter the stock market. The reform of the stock market system, securities law come into practice; comprehensively administer of the securities companies and the reform of the shareholder structure set the stage for the long-term stability of the securities industry. Recently, the multi-layer capital market system is establishing, the innovation of financial products is proceeding steadily. Once Margin Trading, "T + 0" and Market Maker System are put into practice, they will offer a new profit growth point to those high quality securities companies. And the system reform is another reason for securities companies enters the market. Based on the above information, this paper focused on Reverse Merger of securities companies.As the result of the lack of financing channel, in order to achieve the purpose of financing, some problems such as appropriation of clients' security deposit appeared. As the most important financial institution in the security market, security companies are playing an important role in the financial system. In order to fully utilize its functions, stable, efficient and amply funding source have to be insured. Therefore, the financing problem of security companies becoming the bottle-neck of the development of security companies in China.Reverse merger of security companies can avoid the high entry threshold and long term waiting of IPO, achieve the goal of enter into the security market in short term. Reverse merger helps security companies expanding capital rapidly, establish reliably funding channels and solve the liquidity problems. Besides, after reverse merger, as listed companies, the corporate structure of security companies will be improved. As the enhancement of external constraint, the transparency of the operation management will be enhanced. All of these will decrease the risk in the market to some extent. Meanwhile, the equity incentive mechanism helps listed companies bring in talents, increase efficiency and accelerate the development of security companies.This study provided an essential theory for the reverse merger of securities companies. We would expect this paper will become a reference for the reverse merger activities of securities companies in China.