The Use Of The Listed Company "shell" "shell" And The Rto - Discussion Of Sichuan Province

With the development of China's security market, there have appeared a few listed companies with poor managerial administrative expertise, and unsatisfactory performance. Called as 'shell' companies, they will hold the qualification of being listed on stock exchange. Under present institutional arrangement of 'control over a total amount and limit to given number of issuers', therefore, the 'shell' companies with a profitable scarcity resource in security market become a target for those unlisted companies' efforts of enabling themselves to be ranked as listed ones. As the result, the assets--restructuring drive focusing on trading of the very 'shell' of these listed companies has been on the rise with full force. Statistics shows that of 343 cases of listed companies' assets--restructuring activities, 28 ones are featured by procurement of buying a 'shell', while 27 ones of borrowing a 'shell'. Thus, 'Shell' value and its utilization have become a focus of market dealers' attention research. Therefore, it is of important and practical sense to explore and make full use of its value, connotation and function. To underline the above issues, the article falls into three parts: Part One is a theoretical analysis of the so-called 'shell' resource. First, a definition is given to its meaning and a concrete analysis to its formation reasons. We argue that the value of 'shell' resource consists of four main values: value of raising funds, added value of capital, value of intangible assets, and value of policy support from government. All of the four value's formation is mainly made up by the special privileges listed companies have, which result from the special institutional arrangements and policy` supports during the transition of China's economic system. And, that is just why the 'shell' resource of listed companies is highly priced. Second, a theoretical model of the 'shell' value calculation is advanced. Assuming that all shares of listed companies be current, the model indicates that the value of 'shell' resource is due to the qualifications of being listed, which are not only scarce but also derivable. On quantity, the shell value may simply equal to the margin between the market value of this company when listed and the supposed market value before listed. Finally, in terms of whether the controlling entity of a listed company has shifted, a discussion is made about various patterns of utilizing 'shell' resources and their respective advantages and disadvantages. Part Two press a detailed analysis of the pattern of 'going public through buying a shell'. First, on the basis of our exposition of relationship between company restructuring and going public through buying a shell, we expound its definition and operating process. The pattern refers to a process of assets-restructuring activities, in which an unlisted company becomes listed, either directly or indirectly through buying a certain number of shares of a listed company, a 'shell' as is called so as to be in control of the 'shell' company. Compared with the pattern of 'going public through borrowing shell', it is a kind of true market behavior, less influenced by governmental executive plan. Then, the reasons why this pattern can really work are analyzed from the viewpoints of the buying party and the selling party. What follows is a summary of the general conditions target shell companies should have. The summary comes from analysis of such cases happened in both Shanghai and Shenzhen securities exchanges. All these conditions form a starting point for the author's analysis of 'shell' resources of listed companies in Sichuan province, which is to lay out in Part Three. Finally, five patterns of shell buying are expounded, each illustrated with cases analysis. We find, due to the special ownership structure of China's listed companies, there exists a variety of buying patterns, like of acquisition of current shares owned by social publics, of transference of shares owned by legal persons, of transference of shares owned by state, of indirect...