A Multi-case Study On Shareholding Exercise Of Investment Service Center

The high concentration of equity of listed companies in China and the relative lag of the development of relevant legal systems make the main problems of the capital market focus on the conflict between large shareholders and small and medium-sized shareholders,that is,the second type of principal-agent problem.Therefore,restricting the opportunistic behavior of large shareholders and protecting the legitimate rights and interests of small and medium-sized shareholders have always been the core of China’s capital market system construction.In order to further strengthen the protection of small and medium-sized investors,in December 2014,the CSRC and the Insurance Bureau took the lead in establishing the CSI Small and Medium Investors Service Center,which holds A-shares of each listed company in Shanghai and Shenzhen Stock Exchanges,and exercises the rights of shareholders such as inquiry,suggestion,voting and litigation.It has played a role in strengthening the protection of the legitimate rights and interests of small and medium-sized investors by leading small and medium-sized investors to exercise their rights actively,safeguard their rights according to law and standardizing the governance of listed companies through demonstration.The shareholding exercise of the Investment Service Center was started on February 19,2016.By the end of August 2022,the Investment Service Center had held 4924 shares of listed companies,exercised 3359 rights and exercised 4244 shareholder rights.At present,in practice,the activities of holding shares,exercising rights and safeguarding rights organized by the Investment Service Center to protect small and medium-sized investors have received good responses and positive comments in the capital market.It is an eternal development trend to continue to strengthen the protection of investors’ rights and interests.Therefore,it is of great significance to summarize the successful experience of the Investment Service Center,analyze the implementation process and effects of the investment service center’s exercise behavior,and deeply study the path to achieve the effects behind it.This thesis adopts the case study method,and specially selects three classic cases of investment service center with good shareholding and exercise effect and great influence to study.First of all,based on the relevant theories at home and abroad,it sorted out the relevant literature on investor protection,shareholder activism,and the exercise of investment service centers at home and abroad,summarized and formed a literature review,and listed a separate section to summarize the impact of the promulgation of the new Securities Law on the exercise of investment service centers.Then,this thesis introduces the concept and business type of investment service center,the concept of shareholding and exercise of investment service center,its development process and purpose,and the relevant theoretical basis.This theoretical basis mainly includes the dual principal-agent theory,information asymmetry theory,and the theory of preferential protection for the weak.Secondly,three investment service centers’ shareholding and exercise cases are introduced.First,the investment service center publicly solicits minority shareholders’ voting rights to help revise the Articles of Association of China Bao’an Company and delete unreasonable clauses;Second,the Investment Service Center,together with major shareholders,held an extraordinary shareholders’ meeting of Zhongyida to promote the normalization of corporate governance;Third,the Investment Service Center raised a question on the Fengxing share acquisition through online exercise and shareholder proposal letter,forcing it to modify the acquisition plan.The case involves online exercise,sending shareholder’s proposal,participating in the shareholders’ meeting,and making public voice,which fully restores the specific scenario of exercise.It specifically introduces the background and exercise process of the shareholding and exercise of the investment service center in each case,and analyzes the basis and effect of the exercise of the investment service center in detail.Then,this thesis analyzes the effect realization mechanism and spillover effect behind the shareholding and exercise of investment service centers,and finds that there are five paths to realize the shareholding and exercise of investment service centers and protect the rights and interests of investors.First,through joint shareholders’ participation in corporate governance,direct collective exercise of power affects the decision-making scheme.The second is to use the regulatory background to improve the pertinence of company information disclosure and reduce the information asymmetry between management and shareholders,large shareholders and small and medium-sized shareholders.The third is to increase the company’s reputation pressure with the help of online public opinion,forcing the management to make the right choice.The fourth is to temporarily cause the market to react negatively to the company,which will benefit the capital market in the long run.Fifthly,it increased the risk of legal proceedings of the company,resulting in a deterrent effect.The spillover effects of shareholding and exercise behavior of investment service centers mainly include:participating in corporate governance and promoting the standardization of corporate operation;Improve the confidence and right status of small and medium-sized shareholders;An important symbol of the maturity of the securities market.Finally,the main conclusions of this thesis are as follows: First,the exercise of investment service center can promote the active exercise of small and medium-sized investors;Second,the investment service center pays attention to multi-party coordination and new channel expansion when exercising power;Third,the exercise of the investment service center can promote the disclosure of high-quality accounting information;It is the Investment Service Center’s own "regulatory color" to help it exercise its rights efficiently.And get inspiration: small and medium-sized investors should pay attention to the exercise dynamics of the investment service center,and effectively improve their ability to make rational judgments on the behavior of enterprises;Medium and small investors should be active and qualified shareholders and actively use legal means to protect their rights and interests;The education of small and medium-sized investors needs to be further strengthened,and there is a long way to go.