A Case Study On Capital Occupation Problem In New Three Board

Before the New Three Board was set up and developed,Chinese securities market had gradually formed a multi-level market system composed of the Main Board,Small and Medium Board,and Gem.However,the system remained to be beset by both the lack of a unified OTC market and a effective financing channel for those small and medium-sized enterprises who failed to reach the standard of market access.Under such circumstances,National SME share transfer system,known as New Three Board was formally established and operated in January 2012.Ever since the full expansion of New Three Board in 2012,the market has achieved remarkable development.As of December 2016,the total amount of listed companies in New Three Board has exceeded 10,000,with the toal market value amounted to 4.558 trillion yuan.New Three Market managed to provide a new channel of financing for numerous small and medium-sized enterprises,and inject great vitality into Chinese real economy.Therefore,how to realize further improvement of construction of New Three Board,how to improve the quality of listed companies,as well as how to solve the existing structural problems to the board,can be of great importance to China's economic development.Nevertheless,within China's listed companies and non-listed public companies(hereinafter referred to as listed companies),the existence of illegal capital occupation by major stock holders is quite common.At the beginning of 21 st Century,China's A share market had seen the raging of capital occupation of listed companies.Not only did it severely affect the business of listed companies,increase potential financial risks,but also disrupt the normal market transaction order,hinder the development of national capital stock market.In recent years,a great comeback momentum of capital occupation is emerged,especially in New Three Board.With most of the companies to be listed entering the capital market for their first time,their operating method can be conflicted with the order of the capital market.Their major shareholders and associated party hence are prone to irregularities during business operation.On the other hand,many listed companies show the characteristic ofownership concentration and even the “dominance” of ownership.The actual controllers or controlling shareholders of listed companies can bypass the supervision of the board of directors,the board of supervisors and senior management,holding absolute control power and dominating the right to vote.These characteristics of listed companies in New Three Board determin the inevitability of the occurance of capital occupation.This paper mainly discussed the capital occupation of China's New Three Board market.Respectively according to S company and LingZhi Environmental Protection company,both the means and causes of capital occupation are discussed.It is believed that the unreasonable ownership structure,the faulty internal governance structure,the poor quality of external audit,and the financing difficulties are responsible to the capital occupation problem of the case companies.In the fifth part,this paper has also put forward the countermeasures and suggestions to micro and macor prevention of capita occupation.