A Case Study Of Face Value Delisting Of Sinovel Wind Group Co.,Ltd

The delisting system is important for accelerating the elimination of winners and losers in the market and optimising the allocation of resources,but since the introduction of the delisting system in 2001,the number of companies actually delisted from China’s capital market has been scarce,with the delisting rate on the main board market being less than 1%,making the delisting system almost a mere ornament.2012 saw the SSE and SZSE announce new delisting requirements,one of the key initiatives being the introduction of "face value delisting".As a former leader in the wind power industry,Sinovel Wind Group Co.,Ltd has continued to lose money since its listing in 2011 and struggled on the verge of delisting for nine years until it collapsed under the "face value delisting" requirement in 2020.This article examines the entire process of Sinovel Wind Group Co.,Ltd ’s de-listing from par value four times in nine years,explores the reasons for its de-listing,and attempts to extract insights for similar listed companies and regulators.The article first introduces the concepts of " face value delisting ",insider control and share buyback,and introduces principal-agent theory,stakeholder theory and incomplete contract theory as the theoretical basis for the case study.The paper then briefly reviews the profile and development process of Sinovel Wind Group Co.,Ltd,focusing on the various self-help actions taken by the company on the verge of delisting four times until its eventual delisting.The paper analyses the reasons for Sinovel Wind Group Co.,Ltd ’s "face value delisting" from both an internal and external perspective,finding that,from an internal perspective,Sinovel Wind Group Co.,Ltd ’s financial position was poor,with a number of financial indicators performing poorly compared to similar companies in the industry and operating in a poor state;corporate governance was in a state of failure,with a fragmented shareholding structure,no effective controller and insider control The company’s external reputation is deteriorating and investors are losing confidence in the company.Externally,the tightening of macro policies and the unfavourable situation of a shrinking industry have accelerated the delisting process of Sinovel Wind Group Co.,Ltd.Our analysis shows that the measures taken by Sinovel Wind Group Co.,Ltd to avoid delisting on several occasions did not address the root cause of the problem,but merely delayed the delisting process.In fact,Sinovel Wind Group Co.,Ltd is a company with a poor operating record,weak management and poor credit standing,and is not a good company to invest in.The case of Sinovel Wind Group Co.,Ltd’s "face value delisting" revealed that the value of the existence of listed companies should lie in the continuous improvement of the quality of their operations,the importance of corporate governance,the cyclical nature of industry development,the understanding of the stock delisting system and other relevant regulations,etc.Only a good fundamental approach to the long-term development of listed companies in the capital market is the way out.Regulators should also screen bad companies,strictly implement and revise the delisting system to maintain a good market ecological environment.