A Study On The Loss Of Control Of Coship Electronics

In recent years,the pledge of stock right is applied by more and more listed companies in A-share market.Until the end of December 2018,3543 of 3565 listed companies in A-share market have pledged the share right And from January to July,2018,95 listed companies in A-share market have changed corporate control of right due to the risk of equity pledge financing against the backdrop of frequent fluctuations in the market.Under the influence of volatile in stock market,the financing is limited for many listed companies and the equity pledges may be closed out.For companies with high shareholding pledge,the shareholding pledges of big shareholders are hard to undersell.Actually,if big shareholders can't dispose their own stock right by themselves,it will also have impact on controlling companies.It is the commonplace that the shareholders of listed companies would like to obtain funds by equity pledge financing to meet the requirements for development,but it is also important to know the risk of pledge of stock right.Equity pledge can easily lead to the separation of powers and then lead to the principal-agent problem.Since the equity pledge just transfer the income right of the equity without giving the right of control,the risk of equity pledge.Therefore,by studying the motivation of applying equity pledge in these listed companies and then analyzing the riskThis paper selects the case of the loss of control rights of Coship Electronic as a case study.First of all,this paper introduces the background and process of the case,and then analyzes and then analyze the four motives of Yuan Ming,the major shareholder of Coship Electronic to apply equity pledge.With the analysis of the motive,I will study the trigger condition of risk of control rights when the company apply equity pledge and analyze why Yuan Ming lose his control right in this process.After pointing out the problems the company have met when applied equity pledge,I will put forward my suggestions about how the listed companies regulate equity pledge financing and how reduce the risk of control rights after applying equity pledge.After analyzing and studying the case of Coship Electronics,I have found that the equity pledge will bring the funds but at the same time,it will bring the risk of control rights,especially for those listed companies who just have only actual controller.Besides,it will damage the interests of medium and small shareholders and investors in forward the following suggestions: firstly,listed companies need to strengthen internal governance and establish the system for the balance among various departments to avoid the existence of sole control right;secondly,listed companies should regulate board of supervisors to give full play of it;thirdly,listed companies should limit the amount of equity pledges;fourthly,listed companies should establish the risk regulation system to supervise the flow of funds and require debtors to improve the transparency of information disclosure;fifthly,the CSRC and other departments need to improve the relevant laws and regulations about equity pledge.