News Center

Tianjin Equity Exchange Enterprise Equity Listing Trading.

Published:

2010-07-01

Abstract:The world's major securities markets are originated from the over-the-counter market, in the stock exchange has been fully developed today, the over-the-counter market still has a lot of room for development. Under the promotion of the financial reform and innovation policy of the State Council, Tianjin equity exchange was officially launched, and has made certain achievements in more than a year, which has injected a strength into the construction of equity trading platform for non listed public companies. Lawyers' legal services play an important role in the equity listing of enterprises on the Tianbao Stock Exchange and play an active role in helping small and medium-sized enterprises to finance.

Subject words:Over-the-counter trading Tianjin equity exchange lawyer business.

Establishment and Development of Tianjin Stock Exchange in 1.

In general, capital markets have four major functions, namely, resource allocation, price discovery, risk management and corporate governance. The multi-level capital market system refers to the market transaction system established for enterprises of different sizes and degrees of development to meet the different market financing and investment needs of these enterprises. Structurally, the structure of the multi-level capital market has three layers, the first layer is the main board market. The main board market listing standards are the most stringent, mainly for mature large enterprises to provide equity financing. The second layer is the small and medium-sized enterprise board market and the growth enterprise market, which are mainly oriented to innovative small and medium-sized enterprises, and their use is to provide capital market services for small and medium-sized enterprises. By lowering the listing standards, such as reducing the requirements for performance and profitability, it is more inclined to focus on the growth potential and research and development capabilities of enterprises to help SMEs obtain capital services. The third layer is the over-the-counter market. The OTC market has the lowest listing standards, mainly serving small and medium-sized enterprises in science and technology parks and other eligible small and medium-sized enterprises. The above three levels of the market have different modes of operation, listing standards, regulatory requirements, they together constitute a clear positioning, complementary market system.^[1]

In China, outside the Shanghai and Shenzhen main boards, the establishment of an equity trading platform for non-listed companies, that is, the third-level trading market, has always been regarded as the most important way to solve the financing problems of a large number of small and medium-sized enterprises in China. China's capital market authorities only began to propose this idea after the launch of the GEM. Before that, the practice of building this market platform from the bottom up has been going on.^[2]In March 2008, the State Council officially issued the "Approval on the Overall Plan for the Comprehensive Supporting Reform Test of Tianjin Binhai New Area". Subsequently, in May, the Tianjin Municipal Government approved the Tianjin Equity Custody Trading Market to carry out "two highs and two non" corporate equity and private equity fund transactions. In July 2008, the Tianjin Municipal Government submitted to the State Council the "Tianjin Binhai New Area Comprehensive Supporting Reform Test Financial Innovation Special Plan", which supports the innovative development of the Tianjin Equity Exchange, continuously improves the operating mechanism, improves the market network, expands the scope of business, and expands Market scale, give full play to market functions, and provide efficient and convenient equity investment and financing services for small and medium-sized enterprises and growing enterprises. After 6 rounds of soliciting opinions from 16 departments of the State Council, it was officially approved by the State Council on September 4. As a result, Tianjin Equity Exchange has been officially recognized and supported by the State Council. After a series of preparations, the Tianjin Equity Exchange was officially launched at the end of September 2008.

Starting from the equity transactions of "two non-" companies, Tianjin Equity Exchange has innovatively explored a series of institutional arrangements in the over-the-counter trading market, and has initially formed the framework structure and system of the national unified equity trading market. Its main features are a two-tier progressive market structure under a unified system, a mixed trading system based on two-way quotation by market makers, and a small, multiple, fast and low-cost financing model.

2. Lawyers Focus on Legal Issues in Corporate Equity Listing Transactions

No enterprise is born to meet the listing conditions. The process of equity listing is a process of enterprise's own development and standardization. Listing is a phased goal. The realization of this goal depends on the continuous improvement of the standards determined by relevant laws and regulations, and the assistance of professional and experienced securities dealers, lawyers and accountants. In the process of providing legal services for corporate equity listings, the author found that legal issues of particular concern include:

(I) property relations

A clear property right relationship between equity and assets is one of the basic requirements for the proposed listed enterprise. Many enterprises in the development process there are a variety of situations that may affect the stability of equity, such as proxy shareholding (entrusted shareholding), dormant shareholders, equity incentives, etc. For this kind of situation, because it will affect the stability of the equity structure of the company to be listed, it must be cleaned up and standardized before the materials for listing are declared.^[3]

As the relevant laws and regulations require the inspection of whether the enterprise has undergone major changes in equity and assets in three consecutive years, after determining the listing target (at least within a full year), it is necessary to ensure that the single largest shareholder (in essence, the actual controller), the decision-making level, the main personnel of the management and the company's assets can not undergo major changes, otherwise the listing time will be extended and delayed.

　　(II) tax preferential policies

The tax issue directly reflects the authenticity of the business income and profit of the enterprise. For enterprises, based on the consideration of reasonable tax avoidance, they often use the way of increasing costs and reducing taxes, which leads to the problem that the past tax records can not actually reflect their true profits.

For enterprises in the early development process due to their own various reasons caused by not fully declared or paid the income tax payable or long-term tax arrears, usually through the way of tax compensation to remedy; if the original accumulation stage of private enterprises is to pay taxes in the form of collection or fixed amount, if the enterprise intends to list, it needs to be restructured and standardized as soon as possible, and change the collection or fixed amount to audit collection.

The Listing Review Committee pays special attention to whether there is a contradiction between the preferential tax policies enjoyed by the enterprises to be listed in the first three years and the national tax laws and regulations. If the tax preferences enjoyed by the enterprises are inconsistent with the current national tax laws and administrative regulations or exceed the authority of examination and approval, the issuer shall provide the confirmation documents issued by the provincial tax department, And the lawyer shall issue relevant legal opinions.

For local preferential tax policies that do not comply with the provisions of the national tax law or violate the national tax law, there may be a risk of being recovered. The proposed listed enterprise shall clearly indicate the risk of tax recovery in the prospectus, and require the original shareholders of the proposed listed enterprise to undertake that the original shareholders shall bear full responsibility if there is a need to make up for tax.^[4]

　　Introduction of new investors in (III)

Before a limited liability company is changed into a joint stock company as a whole, new investors are often introduced based on the consideration of expanding the size of capital or improving the corporate governance structure. At present, there are no excessive restrictions on large-scale private placement before declaration in the audit. However, if the amount of private placement exceeds twice the net assets of the company and the audit finds that the company has more monetary funds, it is considered that the company has greater operational risks and cannot judge whether it can continue to develop. It is possible to impose certain restrictions on such companies. In this regard, the following issues should be paid attention to: First, it will not affect the company's continuous calculation of operating performance (at least three years). If there are no major changes in the main business and assets, no major changes in directors, senior management, and core technical personnel, actual control The person does not change, etc.; second, it is conducive to the development of the company's business and market expansion, and can have a synergistic effect on the company's business and production and operation; third, the scale of funds raised is appropriate. If new investors make capital contributions by discounting assets, they must evaluate the price, and their scale should also be appropriate, considering the impact of their capital contributions on the comparability of the company's business records. Fourth, the discount ratio of new shareholders in the same period should be the same whether they make capital contributions in cash or in kind. Fifth, the subscription price or discount price of new shares is generally a certain premium on the basis of the net asset value.

(IV) land use rights issues

In addition to the legal land use right certificate, land use right transfer contract and land expropriation procedures, the acquisition process of land use right certificate should not have defects and legal procedures should not be missing. For example, the transfer of land use rights should first clarify the nature of the land, whether it is state-owned or collectively owned. If it is collectively owned, the collective land should be converted into state-owned land through expropriation procedures, and then go through the procedures for paid use such as transfer; secondly, the transfer of land use rights The fee should refer to the latest benchmark land price and minimum floating limit issued by the local government, and judge whether the transfer amount meets the regulations based on the lot and level.

Generally, the land user shall pay the transfer fee in full within 60 days after signing the land use right transfer contract, otherwise the transferor shall have the right to terminate the contract. However, in the face of tens of millions or even hundreds of millions of transfer fees, allowing companies to pay within 60 days may cause their cash flow to be tight and affect operations. Local governments generally require enterprises to pay within a certain period of time (usually one to two years, depending on the amount of the transfer and the situation of the enterprise). Therefore, in the early stage of restructuring, as long as there is a legal land use right transfer contract, the capital shareholders can fulfill the payment obligation within the period specified in the contract and the government's approval. However, according to the provisions of the Land Management Law before the declaration, the transfer fee should be paid in full and the land use right certificate should be obtained. In addition, when the land is transferred, it must be verified by the land registration authority to ensure that there are no third-party rights and land uses that violate the local government's planning.^[5]

　　(V) related transactions

Many related enterprises and many related transactions are generally the biggest problems of private enterprises with strong family color. Many professional institutions have proposed that the directors, supervisors, senior executives of the companies to be listed and the listed entities should jointly establish companies to circumvent the strict requirements of the China Securities Regulatory Commission on related transactions. In fact, this method is not feasible according to specific review requirements, even if directors, The proportion of supervisors and senior executives is low, because this solution can easily lead to the transfer of business and profits.

Divestiture or acquisition of some related enterprises by means of asset acquisition, equity transfer, capital increase and other methods are commonly used to eliminate related party transactions. However, since these methods themselves belong to related party transactions, the fairness of pricing of related party transactions should be specially ensured in the implementation. In the process of transaction, independent intermediary agencies such as qualified accountants or asset appraisers should be employed to obtain a fair pricing basis.^[6]

There are the following principles for regulating related party transactions: first, to avoid unnecessary related party transactions; second, to ensure the fairness of the price of related party transactions for necessary related party transactions; third, to improve the corporate governance structure of the company, improve the operating rules of the general meeting of shareholders and the board of directors, and perform the avoidance system of related shareholders and related directors in voting matters of related party transactions.

(VI) competition in the same industry

The proposed listed enterprise is required to include.Shareholders holding more than 5% of the applicant's shares, directors, supervisors and senior management personnel of the applicant, shareholders holding more than 5% of the applicant's shares, and directors, supervisors and senior management personnel of the applicant invest abroad or serve as directors or senior management personnel Related parties of the enterpriseThere can be no competition in the same industry. These requirements are not the timing requirements for the companies to be issued and listed, but require that there should be no serious competition in the same industry throughout the reporting period, and the same is true for related transactions. Special attention should be paid to this in the design of restructuring and restructuring programs.

3. Tian Stock Exchange Enterprise Equity Listing Legal Services is a Chaoyang-style lawyer business variety.

A large number of small and medium-sized enterprises are facing financing problems, and Tianjin Equity Exchange provides a good way to solve this problem. The law firm where the author works has actively participated in the equity listing business of a number of enterprises on the Tianstock Exchange, with a lot of emotion. Shandong Dadi Beef Beef Halal Food Co., Ltd. is the first customer of the author in the Tian Stock Exchange. The author provides the company's due diligence, the company's shareholding system reform, corporate governance standards, the company's equity-oriented private placement and the formulation of listing transaction plans, special legal issues Demonstration, issuance of legal opinions and lawyer work reports and other services to provide all-round legal assistance for its equity-oriented private placement and listing transactions. In the end, the company was successfully listed on the Tian Stock Exchange, and the financing effect was very satisfactory, which provided financial impetus for the sustainable development of the company.

After participating in the listing business of the company on the Tian Stock Exchange, the securities business of the author's law firm has also taken a historic step from the traditional field to the multi-level capital market. We believe that the current performance of the traditional capital market is not satisfactory, and the multi-level capital market, including equity and private equity fund listing, will play an important supplementary role. More and more small and medium-sized enterprises will realize the equity circulation and financing function through the multi-level capital market, and the lawyer industry will have a very broad space to provide services for this.

Comments

[1] Tian Li China's Multi-level Capital Market Construction Research Consumer Guide 2009(1)

[2] Zhan Qian, Xi Min Thoughts on the Construction and Improvement of China's Multi-level Capital Market System Journal of Southwest University of Science and Technology (Philosophy and Social Sciences Edition) 2009.26(4)

[3] Hu Haifeng, Luo Huiliang New Horizons on Multi-level Capital Market Construction in the National Strategy of Independent Innovation 2009(1)

[4] Sun Lujun actively promotes the development of multi-level capital market to resolve the financing difficulties of private enterprises macro-analysis 2009(4)

[5] Wang Jingwei to build a multi-level capital market structure to meet the financing needs of the private economy Henan Institute of Financial Management Journal 2009(6)

[6] Shi Yongdong, Zhao Yonggang Research on China's Multi-level Capital Market Construction, Shenzhen Stock Exchange Comprehensive Research Institute 2006.4

References

[1] Zhang Jun's Master's Thesis on Transaction Costs, Institutional Change and the Evolution of China's Securities Market Hierarchy Zhejiang Industrial and Commercial University, 2004.

[2] Enterprise reform and management 2005 for the construction of a multi-level capital market in the post-transition period (3)

[3] Zhao Xueqin Structural Optimization and Institutional Innovation of China's Securities Market Shanghai Sanlian Bookstore, 2004.

(This article won the third prize of Jinan excellent lawyer paper in 2010)

Key words:

Anye Reconciliation from the Purpose of Claims against Japan