Study On The Process And Effects Of Reduction Of Major Shareholders By Using Employee Stock Ownership Plan

At present,because China's relevant policies and regulations are deficient in the protection of small and medium-sized investors,it often happen that major shareholders in capital markets reduce their stakes,reducing their stakes has been a main way for major shareholders to encroach on the rights and interests of small and medium investors.In order to standardize and promote the stable and healthy development of the capital market,the relevant regulatory authorities have issued a number of documents and made a number of regulations on the reducing stakes of the large shareholders and the directors of the directors of the listed companies.Especially on May 27 th,2017,China Securities Regulatory Commission issued a announcement named The Regulations on reducing shares of shareholders and directors in listed companies(Ninth Bulletin of 2017),which sets strict regulations on disguised reduction behaviors such as block trade and agreement transfer existed in current stock market,which was regarded as the strictest regulation about reduction in the history.Before long the release of the strictest new rules,some major shareholders of listed companies opened a new path,taking advantage of the good news of ESOP(Employee Stock Ownership Plan)to perk up the share price in the secondary market.Generally speaking,this plan has long lock time,agrees with the advantage of new rules that reduce holding-shares and makes ESOP(Employee Stock Ownership Plan)a legal and compliance channel for major shareholders to reduce their holdings,causing not only they can extract huge funds and influenced corporate image,but also seriously invade the legitimate rights and interests of minority shareholders.By analyzing the reduction of major shareholders who make it by ESOP,this essay remind supervision institutions that they should perfect regulation about major shareholders' reduction as soon as possible.Meanwhile,the analysis of major shareholders' reduction and employee stock ownership will enrich the present theory research and provide a new perspective in researching major shareholders' tunneling behavior and ESOP in listed companies.Dahua belongs to leading listed company in Chinese security industry,its shareholders reduced three times through ESOP from May,2015 to July,2017.So it has a typical significance on analying big shareholders' s reduction by researching it.By using Literature research,this essay Commentary the motivation,means and economic effect of major shareholders' reduction,as well as the relationship among ESOP,business performance,market value and employee engagement.Then,refine the major shareholders,reduction and employee stock ownership and Explain relative theory basis and Development status.And then the author defines the concept of the major shareholders,reduction,and employee stock ownership plan respectively and introduce the development status around the related concepts.On the basis of theoretical analysis,combined with the current policy and current situation,this paper analyzes the path of the large shareholders to reduce their holdings by the employee stock ownership plan.In the part of case analysis,this paper respectively introduces the basic information of Dahua,background and reasons of the reduction of big shareholders in Dahua,and mainly introduces the three times process of reduction of the large shareholders with the employee stock ownership plan.In the end,from the following three dimensions:the damage of the company image,the damage of interests of the small and medium shareholders and the excess income of large shareholders' gain,presents the effect caused by reduction of major shareholders in Dahua.In the end,the author comes up with the conclusion of the research: listed company's big shareholders need to control the frequency and potency dimension of reduction,there are bugs in supervision measures in big shareholders' reduction,big shareholders' reduction can cause negative effect.Meanwhile,based on the conclusion,the author give suggestions from three perspectives-regulators,listed companies and investors:supervision institutions should introduced new regulation as soon as possible against the reduction of major shareholders who make it by ESOP.Meanwhile,listed companies regulate their behavior every moment.In addition,investors should improve the awareness of risk and invest values.