Research On The Major Shareholders’ Interest Encroachment And Its Prevention Under The Pledge Of Stock Rights Of *ST Yinyi Company

From the establishment of Shanghai Stock Exchange and Shenzhen Stock Exchange in 1990 to the establishment of Beijing Stock Exchange in 2021,China’s capital market has been developing and growing,and a variety of financing methods exist among them.Equity pledge appears in China’s capital market as a new financing method,which is favored by listed companies because of its simple operation and low cost.Since 2014,the scale of equity pledges of listed companies in China has been expanding,and many listed companies have been able to raise funds in this way to expand their business scope and take their company’s development to a higher level.However,while equity pledges have been adopted by more and more major shareholders as a financing method,the problems they bring have gradually surfaced.2018 saw a number of listed companies known for their high equity pledge ratios explode one after another,with a number of listed companies,including *ST Yinyi,facing major financial crises,causing widespread concern in the capital market and among investors.Due to the special nature of equity pledges,China’s current regulation of them is not perfect,and equity pledges have become a tool for many major shareholders to satisfy their personal desires and encroach on the company’s property,which has brought great damage to the listed companies themselves and various stakeholders.Therefore,it is particularly important to study the misappropriation of interests caused by the pledge of equity interests by major shareholders.This paper takes *ST Yinyi as a case study company,which is a real estate company in China’s A-share market,but since its high ratio and high frequency of equity pledges began to be implemented in 2014,the company’s business performance has turned down sharply,and the stark contrast before and after makes it a great study typical.This paper discusses the motives of equity pledging,the means and effects of using equity pledging to encroach on the company’s interests,and proves that the encroachment of interests by its major shareholders in the context of equity pledging has indeed brought great harm to the company by comparing the financial indicators of *ST Yinyi before and after equity pledging.Finally,this paper proposes how to prevent this problem from four levels: the country,the society,the company and the shareholders,respectively,hoping that all parties will form a joint effort to prevent and reduce the generation of interest-encroaching behaviors under equity pledges and achieve the healthy and orderly development of the capital market.