A Case Study Of Performance Compensation Commitment On The Back Door Listing Of Solar Technology Lo.,Ltd

The reorganization of assets often cause changes in capital structure,asset quality,profitability and other aspects of listed companies,and then it will affect the interests of shareholders of listed companies.When the asset restructuring transactions happen between listed companies and major shareholders,major shareholders may damage the interests of listed companies and minority shareholders.In order to fully protect the interests of minority shareholders,the Commission issued the "Major Asset Restructuring of Listed Companies Management Approach",it clearly stipulated that the listed company should disclosure the difference between actual earnings and profit forecast of related transaction assets within 3 years after the implementation of major asset restructuring,and the counterparty should sign performance compensation commitments for the difference.The promulgation of performance compensation commitment system is aimed to reduce transaction costs brought about by asymmetric information and business risks brought about by future uncertainties and better protect the interests of minority shareholders.However,in recent years,the system has gradually emerged some drawbacks in the practice,many of the performance of listed companies failed to meet the standards,performance promisee even reduce or disguised to avoid performance compensation obligations through a variety of means.This paper studies the case of performance compensation commitment on the back door listing of Solar Technology Lo.,Ltd,and the research methods of literature research,case study and comparative analysis are used to study.First,the paper describes the background and significance of this research,sorting out the relevant legal provisions and theoretical basis about corporate governance,and give literature review from the current study of the performance compensation commitment.And the relationship between cash dividends and interests protect of minority shareholders.Secondly,the paper introduces the basic situations,operating and financial conditions of the backdoor Solar Technology and shell company*ST Shenlong.and introduce the background and purpose of the backdoor listing case,expounds the backdoor listing process,the performance and compensation commitment implementation situation..Thirdly,the paper analysis four aspects of the reason to choose cash performance compensation method,cash performance compensation analysis in the first two years of performance compensation commitment period,performance compensation method modify in the third years,and reducing shares and holding cash behavior of major shareholders.Finally,this paper summarizes and sums up the enlightenment and suggestion from the two aspects of the listed companies and the regulatory agencies in the asset reorganization,especially major shareholders inject asset to listed companies.The conclusions of this case study:stock compensation better protects the interests of minority shareholders;modifying performance compensation methods seems to exceed the performance of the obligation of compensation but actually escaping compensation obligation and damage the interests of minority shareholders when the performance doesn’t meet the forecast;paying particular attention to high cash dividends behavior during performance compensation commitments period and analysis whether the real purpose is to reduce the major shareholders’ funds outflow performance compensation commitments or rewarding investors;when performance commitments compliance rate is low during three years,suggesting extensing the stock lock-up period to avoid large shareholders inject inferior assets through signing the performance compensation and reduce share to transfer profit.