A Case Study On The Use Of Exchangeable Private Bonds By Controlling Shareholders

With the successful completion of the reform of non-tradable shares,China's secondary market has gradually stepped into the era of full circulation of shares.After the abolition of the "non-tradable shares" shareholding restriction by the state,more and more major shareholders gain profits by reducing the shares of listed companies they hold.Since major shareholders know more about the operating status,development direction and other information of listed companies,they often reduce their holdings when the company's stock price is high to obtain high profits.However,the disordered reduction of major shareholders only to ensure their own earnings has caused a great negative impact on the listed companies and also caused chaos in the capital market,making small and medium-sized investors lose confidence in the listed companies.In order to solve this problem,the state has issued various regulations,the major shareholders of the reduction of the conduct of the constraints and norms.However,the high returns brought by the reduction of holdings still make the major shareholders ready to move.In order to avoid the market regulation and achieve the goal of reduction,the major shareholders launched various "fancy" reduction operations.In this paper,the controlling shareholder of the listed company,Dongxu Optoelectronic Technology Co.,Ltd.,uses the method of combining the subscription of private placement shares of the listed company and the issuance of exchangeable private placement bonds to circumvent the policy regulation and the "provisions on reduction of holdings",so as to achieve disguised reduction of holdings and reap huge profits,which seriously violates the rights and interests of small and medium-sized investors.In this paper,through the analysis of the way to reduce the holdings of Dongxu Optoelectronic Technology Co.,Ltd.holding shareholders,mainly tells how the controlling shareholders to infringe on the interests of small and medium-sized investors,and puts forward relevant Suggestions.By using the method of case study,this paper firstly reviews relevant domestic and foreign literatures,and summarizes the motivation and influence of the issuance of exchangeable bonds,and the motivation and influence of the reduction of major shareholders,laying a foundation for the writing of this paper.Secondly,in the process of the case study,the background of the reduction of the controlling shareholders of dong xu is investigated,from which the fundamental causes of the reduction of the controlling shareholders areobtained.In addition,I have a detailed understanding of the whole process of Dongxu Optoelectronic Technology Co.,Ltd 's controlling shareholders to achieve the goal of reducing their holdings by issuing exchangeable private placement bonds.Next,from the perspective of controlling shareholders' choice of ways to reduce their holdings,this paper studies the specific reasons why the controlling shareholders of Dongxu Optoelectronic Technology Co.,Ltd.choose to reduce their holdings by means of exchangeable private placement bonds instead of other ways.Through further research and analysis on the reduction mode of the controlling shareholders of dong xu photoelectric,it is found that this reduction method seriously infringes on the rights and Dongxu Optoelectronic Technology Co.,Ltd.interests of small and medium-sized investors by taking advantage of the convenience of the major shareholders themselves.This paper collects data and materials from various aspects to prove that controlling shareholders reduce their holdings by means of exchangeable private bonds,which has caused great harm to the rights and interests of small and medium-sized investors.Through the study and analysis of the whole case,this paper believes that the controlling shareholders reduce their holdings by using the new financial instrument of exchangeable private bonds,which brings them a lot of income,but at the same time seriously infringes on the rights and interests of small and medium-sized investors.For the first time,this paper analyzes the convertible private debt issued by TUNGHSU GROUP from the perspective of the reduction of the controlling shareholders,and elaborates that the controlling shareholders reduce their holdings through the combination of participating in "private placement" and issuing convertible private bonds,which seriously infringe the rights and interests of small and medium-sized investors.In addition,the study aims to provide some reference for relevant departments to improve the issuance of exchangeable private bonds,protect the interests of the majority of small and medium-sized investors,and promote the stable and healthy development of the capital market.However,due to the lack of practical work experience and understanding of the regulatory system,this paper needs further analysis and research.