Power,Internal Control,and Interest Invasion Of Major Shareholders

The problem of misappropriation of interests has been a persistent evil in China’s capital markets and is a huge problem facing modern corporate governance.Embezzlement of interests has greatly infringed on the interests of small and medium shareholders and has put companies and the industry in a difficult position.It is also complex,and even though it is expressly prohibited by the Securities and Futures Commission,it still cannot be eliminated.China’s governance structure,which is mostly dominated by one single shareholder,family management and internal control failures are widespread,resulting in the inability to effectively curb interest encroachment in China’s capital market,which has seriously disrupted the healthy development of the market.Therefore,through the analysis of the relationship between the power of major shareholders,internal control and benefit encroachment,we propose targeted recommendations on the causes of the occurrence of their benefit encroachment to ensure the effective operation of internal control,effectively prevent the occurrence of benefit encroachment incidents,and thus improve corporate governance,which is of certain practical significance to protect the interests of small and medium shareholders.Listed companies in China have always faced agency conflicts between major shareholders and small and medium shareholders,which is caused by the relative specificity of China’s shareholding structure.This theis analyses the corporate governance structure and internal control of *ST Furen through an ex ante and ex post analysis,using principal-agent theory,information asymmetry theory,private gain theory of control and the "tunnel effect" theory as the theoretical support for the study,and by summarising the information and reports disclosed by the company as well as the financial aspects.It is found that the power of major shareholders has an impact on internal control,and that a decline in the quality of internal control provides a favourable environment for major shareholders to commit misappropriation of interests.This thesis examines the misappropriation of interests by the majority shareholder of *ST Fu Ren.Through case descriptions,case analysis and case insights,it is found that the ways and causes of misappropriation of interests in the case company are closely related,and at the same time,the shareholding structure of *ST Fu Ren is representative,reflecting the many links between the power of shareholders and internal control of Fu Ren Pharmaceutical,and the absolute control of the majority shareholder over the company makes internal control ineffective,thus allowing The absolute control of the majority shareholder over the company prevents effective internal control,thus allowing for the easy realisation of misappropriation of interests.In view of the above problems,effective countermeasures to prevent the misappropriation of interests are proposed,in terms of optimising internal controls,strengthening external supervision and improving the corporate governance structure,in order to provide a reference for protecting the rights and interests of stakeholders and promoting the healthy and sustainable development of China’s capitalist market.