"Investor protection-clear rules, risk awareness" 32.

-- Actively exercise power, understand the reorganization of the "72 changes"

Mergers and acquisitions are the main way for the capital market to optimize the allocation of stock resources, as well as an important means to help listed companies develop with high quality and accelerate industrial transformation and upgrading, which is closely related to the interests of investors. In recent years, major asset restructuring transactions of listed companies have been active and have received widespread attention from investors. Investors should fully understand the matters related to the reorganization, understand the "72 changes" of the reorganization, actively exercise the rights of shareholders, and protect their legitimate rights and interests.

1. what is a major asset restructuring?

Major asset restructuring refers to the purchase or sale of assets by a listed company and the company it controls or controls outside its daily business activities, or the transaction of assets by other means to reach the prescribed proportion, resulting in significant changes in the main business, assets and income of the listed company. If a major asset restructuring occurs in a listed company, it often has a significant impact on the share price. This is because the fundamentals of companies that have undergone major asset reorganizations will generally undergo major adjustments. Therefore, it is recommended that investors should pay attention to matters related to major asset reorganizations of listed companies, such as transaction pricing principles, reasonable valuation of underlying assets, performance commitments and other related matters, Actively exercise relevant rights.

What are the criteria for 2. a major asset restructuring?

The Measures for the Administration of Major Assets Reorganization of Listed Companies (hereinafter referred to as the "Reorganization Measures") revised by the China Securities Regulatory Commission in September 2016 clearly stipulates the standards for major asset reorganization in terms of total assets, operating income, and net assets. One of the standards constitutes a major asset reorganization:

First, the total assets purchased and sold account for more than 50% of the total assets at the end of the audited consolidated financial and accounting report of the listed company in the most recent fiscal year; second, the operating income generated by the assets purchased and sold in the most recent fiscal year accounts for more than 50% of the operating income of the audited consolidated financial and accounting report of the listed company in the same period; third, the net assets purchased and sold accounted for more than 50% of the net assets at the end of the audited consolidated financial accounting report of the listed company in the most recent fiscal year, and exceeded 50 million yuan.

What are the acts that may infringe on the rights and interests of investors in the 3.'s major asset restructuring?What?

There may be insider trading, "leisurely" restructuring, acquisition of inferior assets, unfair asset pricing, failure to fulfill share compensation obligations, significant impairment of goodwill, irregular information disclosure and other violations of the legitimate rights and interests of investors in the major asset restructuring of listed companies, the following details of several common situations:

(I) acquisition of inferior assets

Major asset restructuring should be conducive to enhancing the sustainable operation of listed companies. Some of the restructuring of the underlying assets of the poor profitability, after the completion of the restructuring, can not bring sustained and stable income for the listed company, or even bring losses, the overall profitability of the listed company will have a negative impact. Some listed company controllers and decision makers for personal gain, packaging poor-quality assets, driving listed companies to acquire them, so as to carry out the transfer of interests, raise the stock price, speculative arbitrage and other malicious acts, to the detriment of listed companies and small and medium-sized shareholders.

(II) asset pricing is not fair

The assets involved in a major asset reorganization should be priced fairly and there should be no harm to the legitimate rights and interests of listed companies and shareholders. The valuation of the underlying assets reflects how much the listed company spends to buy the underlying assets, the price value is not worth, is it in the interests of all shareholders. Some listed companies purchase assets at a valuation much higher than the book value of the underlying assets, which is what we refer to as the phenomenon of high valuation. Unreasonably high valuations will cost listed companies a lot of money to acquire assets whose actual value does not match the price, and the interests of shareholders will be lost. At the same time, unreasonable valuation can easily lead to the transfer of benefits, the failure to fulfill performance commitments, goodwill impairment and other issues, so that the performance of listed companies fluctuates and harms the interests of small and medium shareholders.

Unreasonable (III) Performance Commitment and Compensation

Performance commitment and compensation means that in the process of major asset reorganization of a listed company, the shareholders of the acquired underlying assets make a forecast of the operating performance for a period of time in the future, and promise that if the actual operating performance of the underlying assets does not meet the forecast target at the end of the commitment period, Will bear the liability for compensation to the listed company. Some commitment parties are not compliant or unreasonable in setting performance commitment and compensation terms for their own benefit. For example, because the performance commitment is linked to the valuation under the income method evaluation mode, the commitment party sets a high performance commitment amount that is difficult to complete in order to improve the valuation of the underlying assets. When the performance commitment is not realized in the later period, the listed company will face impairment of goodwill, and at the same time, it may face difficulties in implementing performance compensation due to insufficient repayment ability of the commitment party, which will affect the financial situation of the company and damage the legitimate rights and interests of shareholders.

4. in a major asset restructuring investors can pay attention to what matters?

Matters that investors can focus on in a major asset restructuring include:

1. Information disclosure of major asset restructuring

The major asset restructuring of listed companies generally takes a long time and the procedures are relatively complex, and the relevant information will also have a certain impact on the company's stock price. In the part of information disclosure, investors can focus on the resolutions of the board of directors of listed companies and the opinions of independent directors, major asset restructuring plans, major asset restructuring reports, independent financial adviser reports, legal opinions, and audit reports, asset evaluation reports or valuation reports involved in the restructuring, resolutions of shareholders' general meetings and other relevant announcement documents. At the same time, listed companies should also fully disclose the implementation of major asset restructuring, the performance of restructuring commitments, goodwill impairment tests, the difference between the actual profit of the underlying assets and the profit forecast, etc., so that investors can continue to pay attention.

In addition, listed companies may be involved in the suspension and resumption of trading in the process of major asset restructuring. Investors should also pay attention to the announcement of the suspension and resumption of trading of listed companies and make investment arrangements in advance. It is worth mentioning that the Shenzhen Stock Exchange issued guidelines on the suspension and resumption of trading in December 2018, strengthening the supervision of companies that abuse the suspension and resumption system and long-term suspension of trading. this is of great significance to give better play to the role of the market mechanism, enhance market liquidity and protect investors' trading rights, and the concept of "short-term suspension" and "intermittent suspension" is also gradually established.

2. Media briefing on major asset restructuring

According to relevant regulations, if a major asset reorganization of a listed company constitutes a reorganization and listing, that is, a backdoor listing, suspected of circumventing the regulatory requirements of reorganization and listing, being questioned by major media, complaints and reports, etc., the listed company must hold a media briefing. The China Securities Regulatory Commission and its dispatched offices and exchanges may require listed companies to hold media briefings if they deem it necessary.

The media briefing will include the presentation of the parties to the restructuring transaction, media on-site questions and on-site answers to questions. The current controlling shareholders, actual controllers, directors, supervisors and senior executives of the listed company, the controlling shareholders, actual controllers (if any) and representatives of other major counterparties, the main directors and senior managers of the restructuring target, as well as intermediary agencies and other relevant parties should attend the meeting, respond to market concerns and fully accept market supervision.

3. Attend relevant shareholders' meetings

According to the "Reorganization Measures", the major asset reorganization of a listed company shall be submitted to the general meeting of shareholders for approval after the board of directors has made a resolution. The general meeting of shareholders must be approved by more than 2/3 of the voting rights held by the shareholders present. If the asset reorganization is a related transaction, the related shareholders also need to recuse themselves. Therefore, small and medium-sized investors can participate in the relevant general meeting of shareholders and express their views on the reorganization proposal by exercising their rights to vote and question.

In order to protect the interests of small and medium-sized shareholders, when the listed company intends to implement major matters such as asset reorganization, a third party or controlling shareholder and its related parties may provide cash options for the original small and medium-sized shareholders of the listed company, or the third party may provide the small and medium-sized shareholders with the right to request the withdrawal of dissenting shareholders. Small and medium-sized shareholders who vote against the restructuring may exercise the cash option or the right of dissenting shareholders to withdraw from the request, thereby liquidating the shares.