The Case Analysis Of Kaidi Electric Company’ Tunnelling

To the major shareholders of listed companies for tunneling, there are many ways.The way of directional seasoned offering is one of them. There is a phenomenon ofexcessive concentrated in the hands of large shareholders equity in imperfect capitalmarket, and controlled by the largest shareholder. what is more,our country is lack oflegal protection of investors. In the operation of listed companies is in more reflectingthe company’s gathering, a lack of transparency, rent-seeking activities and lots ofrelated party transactions and so on. It’s a reliable way for the major shareholders’tunneling through directional seasoned offering. As a rising star of refinancing market inour country, directional seasoned offering is more and more get the welcome of peoplewith the time going on. As the directional seasoned offering is a emerging thing, therules, regulations and laws is not perfect.This gives left room for profits for the parentcompany or other large shareholders. Therefore, while absorbing in a mature financingmode from abroad, pay attention to whether this new financing model can fuse China’scapital market. How healthy it can be distributed in China’s capital market, how to meetthe needs of the financial markets of socialism with Chinese characteristics.The subject of this paper, namely, kaidi electric company transports interests to themajor shareholder through directional seasoned offering. It can provide some regulationmethods for supervisors through the case analysis.The parent company of Kaidi electric power company’s is the kaidi holding company.And Kaidi holding company is the first major shareholder. This determines the control ofkaidi holding status. This is good for transporting benefit to the kaidi holding company.This paper introduces three different ways about the kaidi electric power companytransporting benefit to the kaidi holding company.They are low price issuing,transferring of shares through raising the price by lots of ways. The three ways realizedtunneling successfully through directional seasoned offering. At the same time it alsoseriously infringe on the interests of small and medium-sized shareholders of kaidielectric power company and it serious damages to the supervision order of capital marketin our country and it brings a lot of trouble to related regulators in our country capitalmarket. Through the study of the case, The paper analysises the key problems of thetunneling from the kaidi electric power company to the kaidi holding company. This paper puts forward four feasible and targeted suggestions from the main problems of thecase.