Study On The Governance Of The Major Shareholders' Interests Encroachment In China's Listed Companies

For a long time,the major shareholders of listed companies infringe on the interests of the company and small and medium shareholders are a major chronic illness in China's capital market.Because the encroachment of interests can bring huge profits to the large shareholders,and the negligible cost compared with the illegality,it makes some large shareholders hesitate to commit crimes.The reason is that China's listed companies generally have the "one-share dominance" characteristic,the shareholding structure and the governance structure are unreasonable,and the major shareholders almost control the listed company with one hand,so that they can easily achieve the purpose of encroachment.On this basis,in order to further regulate the major shareholders of listed companies,China is also actively improving relevant laws and regulations,such as the new securities law revised by the securities regulatory department in 2020,which further increases the cost of violations of laws and regulations,and strengthens investor protection.However,with the improvement of legal supervision,the means by which large shareholders emptied listed companies have become more concealed,and some even bought through audit institutions and government departments,leading to the infringement of the company 's interests by large shareholders,which not only harmed the interests of investors,It also severely disrupted market order.Therefore,exploring how to effectively govern the encroachment of the interests of large shareholders is of great significance to the development of China's securities market.This article analyzes Kangmei Pharmaceutical,which was punished by the China Securities Regulatory Commission for financial fraud in 2019,and comprehensively uses the literature analysis method,case study method and comparative analysis method to obtain the following conclusions: First,in the way of embezzlement,Kangmei Pharmaceutical major shareholder The embezzlement is mainly through direct occupation of funds,related party transactions,and cash-out of the company 'sstock;secondly,the reasons for embezzlement are divided into internal and external aspects,including internal equity structure and unreasonable corporate governance mechanism,and external audit institutions jointly conceal fraud,Relevant laws and regulations are not in place;finally,in terms of the consequences of embezzlement,Kangmei Pharmaceutical 's fraud can only be applied for ST after exposure,and large shareholders are banned from the securities market for life,accompanied by multiple pressures such as declining operating performance,debt pressure,and shareholder claims.Combining theory and case analysis,we believe that to solve the problem of large shareholder's interest encroachment,both internal and external governance should be adopted.Therefore,the feasibility suggestions for listed companies and government regulatory departments are as follows: First,internal corporate governance should be carried out.One is to optimize the shareholding structure and try to avoid the company 's dominance and excessive concentration of shares;second,to improve the board of directors Structure,avoid cross-boarding of board members,and give full play to the supervisory role of the board of supervisors and independent directors.Second,we must emphasize external governance.First,we must standardize intermediaries and eliminate joint fraud by companies buying third parties.Second,we must strengthen information disclosure and improve the problems caused by asymmetry in market information.Third,we must speed up the improvement of relevant regulations and increase the cost of penalties for violations.;Fourth,we must give small and medium shareholders the right to protect their rights and strengthen education.Finally,the author hopes to find and solve problems through the research of this article,use case analysis of Kangmei Pharmaceutical to warn other listed companies in China's market,and call on government regulatory authorities to strengthen relevant legal construction.Only by proceeding from reality and thinking about and improving the shortcomings of the current system can we fundamentally eliminate the frequent occurrence of financial fraud and promote the healthy and upward development of China's capital market.