A Study On The Problems Of PE Instituion's "Quasi-backdoor" Listing

In China,there are two main ways for companies to be listed: initial public offerings(IPO)and backdoor listing.China's IPO review implements an approval system and has strict requirements on the qualifications of the companies to be listed;the review cycle is long and the procedures are cumbersome;in certain circumstances,it was shut down and formed a "dam lake".Compared with IPO,backdoor listing has lower requirements for the companies to be listed and has a shorter cycle,which is preferred by the companies to be listed.However,due to the immaturity of China's capital market,there have been many chaos in backdoor listing,such as inflating the valuation of shell companies through speculation,publishing misleading news to speculate for profits,manipulating stock prices and frequent insider trading,etc.,which have damaged the capital market's normal order.In order to regulate backdoor listing,the supervision of the regulatory authorities has become increasingly strict: in 2011,the CSRC stipulated the convergence of backdoor listing review process to IPO;in 2014,"convergence" was raised to "equivalence";in 2016,"Measures for the Management of Major Asset Reorganizations" was issued,called "the strictest new regulations on backdoor listing in history ".Faced with increasingly tightened regulations,some companies have "opened their own way" to avoid the identification of backdoor listingthrough clever restructuring scheme design,while achieving the same practical effects as backdoor listing.This behavior is called "quasi-backdoor listing".Maybe these companies want to avoid complex review procedures,or maybe there are flaws in their underlying assets,or the industry they belong to cannot be listed through IPO or backdoor listing.PE belongs to such industries which the regulatory authorities do not support to IPO or backdoor listing.So it can only be listed on the domestic market through "quasi-backdoor" methods.The "quasi-backdoor" listing of a PE institution has both the common characteristics of the "quasi-backdoor" listing of common companies and its own particularities.This essay uses the case of Zhongyu Capital's “quasi-backdoor” listing as an example.First,this essay reviews the research on the valuation,motivation,performance,and supervision of backdoor listing by domestic and foreign scholars,in order to find out what is currently inadequate and open up new research directions.Then,by introducing contract theory,regulatory arbitrage theory,and backdoor listing supervision policies,readers may be aware of the causes of "quasi-backdoor".Next,it introduces the general operation methods and the problems of PE institutions' "quasi-backdoor" listing.The case analysis part first introduces the two parties of the transaction,their motivations and the transaction process,and then analyzes the specific problems reflected in the transaction.Finally,it puts forwards corresponding suggestions on the supervision of backdoor listing,restraining inflated performance commitments,and reducing benefits conveying.