A Study On The Erosion Of Minority Shareholders' Equity By The Reduction Of Large Shareholders' Holdings

China's stock market started late and developed rapidly.Especially after entering the 21 st century,the development of the stock market showed an unprecedented explosive growth.Due to the unique characteristics and development environment of China's securities market as well as extensive development mode and high-speed growth rate,the original non-tradable shares and tradable shares circulation system in China's securities market have been unable to meet the needs of stock circulation.The emergence of this problem has directly led to the development of China's non-tradable shares reform.In September 2005,the reform of non-tradable shares in China work in full swing across the country,in the process of development of China's capital market is of milestone significance,marks the originally half circulation system began to collapse,and will eventually disappear in the development of China's capital market,financial capital market will enter the era of full circulation from now on.The reform of non-tradable shares is an inevitable outcome of the development of China's securities market.The reform started less than 14 years ago,with a short history inspection period and no foreign experience for reference.This reform has unique Chinese characteristics.After the reform of non-tradable shares,the shareholders of tradable shares can get corresponding compensation from the non-tradable shareholders who want to realize the circulation of their own shares,so as to protect their vested interests.However,since the restriction of shares since the lifting of the ban,major shareholders frequently reduce holdings has become a hot issue of concern on the market.The increase or decrease of shares is the right of shareholders,and the reduction of shares is the right of shareholders to exercise themselves.However,the roller coaster phenomenon of the performance before and after the reduction of the major shareholders of listed companies occurs frequently,and based on the lack of correct judgment of the stock price of small and medium-sized shareholders,the major shareholders choose the opportunity to reduce their shares by using their own information advantages,which will cause a huge infringement on the rights and interests of small and medium-sized shareholders.Although the CSRC issued new rules for shareholders,directors,supervisors and senior executives to reduce their holdings in 2017,but since 2019,as the a-share market has continued to rise and its share price has been elevated,numerous announcements of reduction have been made.In the large-scale wave of stock reduction,the rights and interests of minority shareholders may still not be effectively protected,so the listed company's major shareholders reduction behavior and the protection of the rights and interests of small and medium-sized shareholders is necessary to study.This paper takes the case of Royal Group Co.,Ltd.'s major shareholders reducing their holdings from 2014 to 2018 as the object of study,reviews relevant literature with the method of case analysis,and analyzes the process,motivation,mode,economic consequences and impact on the rights and interests of small and medium-sized shareholders of listed companies according to time points.The results of theoretical and case studies show that the shareholding structure,governance structure,financial status and information disclosure of a company directly affect the reduction of major shareholders.The negative reaction of the market after the reduction of major shareholders reflects the imperfection and non-standard of China's capital market,and has a negative impact on the company's own operation,thus infringing on the rights and interests of small and medium-sized shareholders.The major shareholder of Royal Group Co.,Ltd selling shares for cash infringes on the rights and interests of small and medium-sized shareholders,which is the result of the comprehensive effect of the above factors.In face of these practical factors,the author will give relevant suggestions and measures from the perspective of how to better protect the rights and interests of small and medium-sized shareholders in the process of selling shares of major shareholders.In order to hold major shareholders responsible for their own actions in the process of reducing their holdings,and at the same time to consider the rights and interests of small and medium shareholders,we should institutionalize the behavior of major shareholders to reduce their holdings,and stipulate more detailed reduction norms.At the same time,we should improve the corporate governance and management structure,make full use of the role of independent directors,continue to improve the market information disclosure mechanism,and strengthen the supervision of securities regulatory bodies.Finally,it is necessary to guide the small and medium-sized shareholders to strengthen their investment concept and guard against it.