A Study On The Protection Of Small And Medium Investors' Rights And Interests In Major Assets Reorganization Of Listed Companies

In China's securities market,the small and medium-sized investors are small in number and scattered in distribution.They lack expertise and the ability to predict and resist risks.In China's listed companies,there is a general phenomenon that major shareholders have absolute power in the major asset restructuring of listed companies because of the excessive concentration of equity in the hands of a few large shareholders.Besides,the information disclosure system in major asset restructuring is not perfect.Neither is the cash option system.When a listed company uses a major asset restructuring to infringe upon the legitimate rights and interests of small and medium-sized investors,the small and medium-sized investors has nowhere to go since the litigation system for protecting the rights of those investors is very imperfect.Since the major shareholders and related parties of listed companies have the inherent demand for obtaining unfair trade considerations and taking profits,in the process of major asset restructuring,major shareholders may use the loopholes in the system to encroach on the rights of small and medium-sized investors.The major shareholders and related parties violate the rules and use major undisclosed information to sneak out listed companies through unfair pricing.They use unfair trades,make false statements,and thus manipulate share prices to induce small and medium investors to buy shares at high prices.Since China does not have a litigation system for securities groups,when the rights of small and medium investors are infringed upon by listed companies that have restructured assets,they lack the expertise and ability to provide evidence to sue the illegal restructured listed companies.The frustration of small and medium investors in the securities market is not conducive to the healthy and orderly development of China's securities market.Therefore,China needs to improve the protection mechanism for small and medium-sized investors in the major asset restructuring of listed companies,improve the confidence of small and medium-sized investors in the securities market,and maintain the stability of the securities market.In respect of the major asset restructuring of listed companies,the relevant laws and regulations concerning the protection of the rights of small and medium-sized investors in China mainly include the "Company Law," "Securities Law,""Regulations on the Supervision and Administration of Securities Companies,""Administrative Measures on the Disclosure of Changes in Shareholders'Shareholdings in Listed Companies" and "Measures for the Management of Major Assets Restructuring of Listed Companies" etc.The supervision of major asset restructuring of listed companies is mainly composed of three parts:the administrative supervision of the Securities Regulatory Commission,the self-regulatory supervision of the stock exchange,and social supervision.This set of laws and regulations and regulatory systems constitutes a protective screen of minority investors' rights and interests in the major asset restructuring of listed companies.The listed companies who violate the legitimate rights and interests of small and medium-sized investors bear the risk of assuming administrative responsibility,criminal responsibility and civil liability.The law also severely cracks down on the behaviors of listed companies that use the reorganization of major assets to infringe on the rights of small and medium-sized investors.However,due to the lack of severe law enforcement in China's crackdown on illegal major asset restructurings,coupled with the imperfect nature of the legal system and the regulatory system itself,illegal actions by listed companies in major asset restructurings are often not easily discovered;even if illegal activities are founded out and confirmed,civil compensation that is crucial to the protection of the rights and interests of small and medium-sized investors in the major asset restructuring of listed companies can not be implemented due to the drawbacks of China's representative litigation system.Therefore it is often difficult to identify the illegal actions,to obtain evidence and to implement compensation in securities disputes among small and medium-sized investors.The US stock market started early and developed rapidly.Its protection of small and medium-sized investors' rights and interests in the major asset restructuring of listed companies provides a good reference for the construction and improvement of China's corresponding protection system.Drawing lessons from the U.S.experience,China should proceed from the following four aspects:First,to improve the information disclosure system related to major asset restructuring of listed companies.China needs to establish fair disclosure rules,refine the content and format of information disclosure,enhance the timeliness and accuracy of information disclosure and ensure the implementation of civil liability for illegal disclosure of major assets reorganization of listed companies;Second,to improve the withdrawal mechanism of major assets of listed companies.China should establish a cash selection system and specify the starting procedures,valuation standards and scope of application of cash options;Third,to establish a securities group litigation system that suits China's national conditions and provide litigation protection for the protection of the legitimate rights and interests of small and medium-sized investors;Fourth,to strengthen the construction of laws and regulations.China should strengthen the supervisory responsibilities of the Securities Regulatory Commission,securities exchanges,and the society,to make sure that the listed companies perform major asset restructuring activities fair and square Lastly,to strengthen publicity on risk awareness in the securities market.China should encourage small and medium-sized investors to establish correct investment ideas,to strengthen risk awareness in the securities market,and to enhance self-protection capabilities.