Study On The Problem Of The Controlling Shareholder's Capital Occupying In Humon

Capital occupation of the controlling shareholders has been existed since the establishment of China's capital market.For reasons such as seizing the private control right,relaxing the financing stress and for interests for small group,the controlling shareholders usually carry out their occupation of the company capital directly or indirectly,the occupation of capital will influence the development of the listed company,infringe the interests of the small and medium size stockholders and affect the healthy and orderly development of the capital market.Although at the beginning of this century,after the issuing of several policies and regulations from Securities Regulatory Commission of our country,the problem of capital occupation by the controlling shareholders have been almost solved.But in recent years,this disease has reignited.The methods such as making use of written documents to take up the capital indirectly and the method of Borrow in the Middle of the Year,Pay Back in the End of the Year are more of covert.Besides these,it seems that this kind of capital occupation has no big influence on the interest of the listed company and the interest of the small and medium size stockholders,while it has a great negative influences on the development of the listed company and the long term revenue of the small size stockholders.Under this circumstance,the problems of the capital occupation by the controlling shareholders should be solved urgently.Regarding the problem of the capital occupation by the controlling shareholders,this paper carries out its study by using the theories such entrusted agency theory,company management theory and internal control and through taking the problem of Shandong Humon Smelting Co.,Ltd which has its capital occupied by the major stockholder Yantai Humon Smelting State Group Co.,Ltd.Through the analysis on the annual report data of the Shandong Humon Smelting Co.,Ltd and after the study,it is discovered that the motivation of the Humon Group is formed and driven by the interest of the group.Meanwhile,the pledge of equity has strengthened the motivation of the capital occupation.By making use of the control advantages of itself,the unreasonable management inside the Humon and the inadequacies of the outside legal environment,Humon Group implemented its occupation of capital by many means such as paper discounted bills without transaction background and taking the affiliated parties as the bridge.In the end,it influences the interest of the small and medium size stockholder in two ways: first,the punishment of the major stockholder because of their occupation of the capital will release the bad news which will cause the price declining of the stocks held by the small and medium size stockholders,second,through the negative influences such as influences on the growth ability of the company,the influences in its market performance,the influences on the refinancing ability and so on,it will influence the interest of the small and medium size stockholders as well as influence the future value of the company.Through the analysis,this paper comes up with suggestions in two aspects including the external supervision and internal prevention such as: increase the cost of breaking the law,perfect the laws of the equity pledge,constrain the system of accumulation vote,strengthen the internal control audit,improve the application of connection of the bank and the company,enhance the internal control,bring in strategic investors and perfect the equity structure in hope of providing a certain degree of reference for the solving the problem of capital occupation from the controlling shareholders in the capital market through the study on the issue of the capital occupation by controlling shareholders in Shandong Humon Smelting Co.,Ltd.