The Perfection And Reconstruction Of The Rules Of The Large-Scale Shareholding Disclosure System

In recent years,the number of behavior of illegal shareholdings is rising rapidly,which has aroused widespread concern in academia circles.This kind of behavior mainly violates large-scale shareholding report system.The system requires investors to perform the obligation of disclosure and stop stock trading within a certain period of time when their shares of listed companies reach a specific proportion.Although China formally introduced the system as early as 1993,its effect is not satisfactory,and the number of illegal holdings has been on the rise.Besides,the measures taken by securities regulators and courts can neither effectively deter the violators nor properly resolve the dispute over rights and interests involved in illegal acts.Taking "Shanghai Xinmei case" as an example,under the intervention of both securities regulators and the court,the violator only paid an administrative fine of 500,000 yuan at last.The regulatory authorities and the trial court did not give satisfactory answers to the disputes about the voting rights restrictions of the illegal shares and the scope of correction.The main reason is that the system of disclosure of large-scale shareholdings in the Securities Law is not perfect,and the lower punishment can not only effectively regulate the behavior of investors,but also make the system become a tool for many violators to make their illegal behavior reasonably.Because of general and vague system content,law enforcement officials and courts cannot find effective measures to deal with disputes so that they often adopt conservative avoidance strategies.In addition,because the disclosure system of large-scale shareholding has been incorporated into the chapter of Acquisition of Listed Companies in the Securities Law and uses unified disclosure rules,it is easy for the executive body and the market body to define the increase of shareholding that touches the disclosure line as the acquisition behavior,thus causing the abnormal fluctuation of stock price.This kind of confusion not only distracts the attention of the related subjects from the real acquisition behavior,but also brings excessive attention to the investment behavior which does not aim at acquisition.In order to solve these problems,the newly revised Securities Law of 2019 has improved the system.The new Securities Law extended the window period of prohibition of trading after disclosure,greatly increased the upper limit of fine,clarified the restriction of voting rights,and introduced civil liability for compensation.From the point of view of protecting investors and target companies,these amendments are worthy of affirmation,which can play a greater deterrent role in violations.However,are stricter disclosure system and increasing legal liability really beneficial? The original intention of the system is to regulate the acquisition behavior,prevent hostile acquisition and protect the right of investors to know information.But doesn't hostile acquisition have advantage? The answer is No.Although some hostile takeovers are to cover up illegal purposes or to sell high-quality assets of the company in order to grab short-term profits,in fact,hostile takeovers can also urge the management of the target company to perform their duties of diligence and improve the level of corporate governance.In addition,the new law neither gave the disclosure system of large-scale holdings an independent position,nor distinguished the behavior of holdings.Compared with the initial stage of the system,the securities market has changed a lot.Obviously,the scope of disclosure cannot be limited to the behavior of shareholding only for the purpose of acquisition.The emergence and development of behavior of shareholding mainly based on financial investment requires the system to be changed.Therefore,legislators should firstly balance the two needs of protecting investors and promoting the development of market for corporate control on the basis of fully understanding the limitations of compulsory disclosure,and design specific system contents to maintain the neutrality of the system.Secondly,legislators should reconstruct the disclosure system of large-scale shareholding,recognize the independent value of the system,give it an independent status,and set different disclosure standards with different legal responsibilities according to the investment purpose.Finally,there are still some irrationalities in the new law about the restriction of voting rights and the content of behavior correction.It is suggested that legislators should further refine its content,so that it can really play the role of early warning and regulation,and promote the healthy development of the securities and acquisition markets.