Rights Of Control, Tunneling, Small Investor Protection

As one of the leading Nonferrous Metal Smelting enterprises, the control rights fight and tunneling of Yunnan Chihong Zinc & Germanium Co. Ltd causes widespread concerned. The paper starts from control rights fight, use the case study method, discussing how the major shareholder Yunnan Metallurgical Group controls Yunnan Chihong Zinc& Germanium Co. Ltd, and then use many kinds of tunneling ways to harm the company’s interests, causing a seriously damage on the interests of minority shareholders. By analyzing the private placement、dividend distribution and asset acquisition to infer the possibility of tunneling, tries to find out the reason of absolute control and the impact of tunneling.This research shows that with major shareholder Yunnan Metallurgical Group improving shareholding ratio through private placement and allotment, aiming to consolidate the status of control of rights, and then take advantage of it for tunneling.,as manipulating the price of private placement, overvalued asset injection,the high price of dividend distribution, these results badly harm interests of minority shareholders. Finally, combine the case research with the existing regulatory system,listing the recommendations for protecting minority shareholders’ interests and optimize the corporate governance structure.