Research On Hollowing Behavior Of Major Shareholders In Private Placement

The private placement is a non-public offering of new shares to specific investment targets.Since China began to reform the split share structure,the forms of equity refinancing of listed companies have become more and more diverse.Especially after the implementation of Administrative Measures for the Issuance of Securities by Listed Companies,the China Securities Regulatory Commission(CSRC)has high expectations for the use of private placement to raise capital.Compared with public offering and allotment,private placement has the advantages of a low threshold,simple approval procedure,and flexible amount of raised funds,which makes it the main way to refinance the equity of listed companies.Starting from 2014,the market for private placement has been rising in popularity and broke the trillion-yuan mark in 2015.Thereafter,it continued to be high in 2016 and 2017.In 2017,the CSRC adjusted the refinancing rules,leading to a cooling of the market.In 2018 and 2019,the market for private placement fell back to 786.398 billion yuan and 668.629 billion yuan.On February 14,2020,the new rules for refinancing turned a 10% discount on pricing into a20% discount,changed the lock-up period from 12 months to 6 months,and the fund-raising conditions related to listed companies were relaxed.The vitality of the private placement market was reawakened.Relevant data show that in 2020,the number of private placements in China’s capital market totaled 1,163 cases,totaling 198.5 billion yuan,both hitting a record in history.Development and contradiction always coexist with one another.Under the background of China’s special system,combined with the fact that directed issuance will lead to the redistribution of interests of large and small shareholders,the issue of transfer of interests in fixed issuance becomes increasingly complicated.For the sake of regulating the order of capital market and protecting the interests of small and medium shareholders,it is urgent to research on the transfer of interests in the process of private placements and the resulting economic consequences.Based on the study of numerous professional literature at home and abroad,this article selects the case of Homa Appliances’ use of private placement for financing as a case and discusses and analyzes it using the approach of practice guiding theory.Chapter 1 summarizes the relevant literature of domestic and foreign scholars studying tunneling in private placement and introduces the research ideas,methods,and overall framework of this article.Chapter 2 provides an overview of the relevant theoretical knowledge involved in this article.Chapter 3 introduces the overview of Homa Appliances and the scheme and process of private placement of Homa Appliances.Chapter 4 analyzes the reasons and paths of the major shareholder of Homa Appliances to tunneling of listed companies using private placement.The impact of tunneling of listed companies by the major shareholder on Homa Appliances is analyzed.The deterioration of Homa Appliances’ financial situation and the damage of its corporate value are found.Some reference suggestions to reduce the probability of tunneling are proposed.