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Original title: Flickering reorganization will have nowhere to hide, listed companies will welcome bankruptcy reorganization new rules
Which are the real reformations and which are the false reformations?
Under the diversified delisting path, the number of bankruptcy and reorganization cases of A-share listed companies has continued to increase, but at the same time many new situations and problems have emerged. In this context, listed companies will usher in new bankruptcy and reorganization regulations to prevent flickering reorganization.
“There are many situations like this now. We are doing civil claims, and the listed companies have gone to reorganize.” A securities rights lawyer told a reporter from China Business News. At present, most listed companies have reorganized. The renewal of new opportunities reflects the value of reorganization, and a few companies are still subject to regulatory investigations after the reorganization.
Regarding this situation, the exchanges have already taken action to restrain. Recently, the Shanghai and Shenzhen Stock Exchange announced the bankruptcy and reorganization draft opinions of the self-regulatory guidelines for listed companies and solicited public opinions. The content shows that the draft opinions have specific provisions on the prevention of bludgeoning reorganization, standardizing the introduction of reorganization investors, and reorganization investors’ acquisition of share consideration.
Focus on preventing flicker reorganization
Recently, Shenzhen Stock Exchange recently released the “Guidelines for the Self-Regulation of Listed Companies-Bankruptcy and Reorganization and Other Matters (Consultation Draft)” (hereinafter referred to as the “Guidelines”) for public comment, and the deadline is January 11, 2022.
In recent years, as the number of bankruptcy and reorganization cases of listed companies has continued to increase, many new problems and new situations involving the disclosure of bankruptcy and reorganization information have emerged, and there is a need for further clarification and regulation.
The Shanghai Stock Exchange stated that the drafting of the “Guidelines” mainly followed four principles: First, play the role of bankruptcy and reorganization to effectively improve the quality of listed companies; Second, adhere to the core of information disclosure and standardize information disclosure such as bankruptcy and reorganization of listed companies; It is to clarify relevant procedural requirements and fully protect the interests of investors; the fourth is to tighten and consolidate the responsibilities of intermediary agencies, and better play the role of intermediary agencies.
According to the bankruptcy and reorganization process of listed companies, the “Guide” has 8 chapters and 53 articles. The main contents include general rules, suspension and resumption of trading and prevention and control of insider trading, application and acceptance of bankruptcy matters, reorganization of investors, creditor meetings, and capital contributions People group meetings and rights adjustment arrangements, court rulings, implementation of bankruptcy matters and supplementary provisions, etc.
In terms of specific content, the “Guidelines” in principle require that trading shall not be suspended during the reorganization period, and information shall be disclosed in stages, and relevant parties shall ensure the confidentiality of insider information and the prevention and control of insider trading; prevent fraudulent reorganization and clarify that listed companies are in the application stage And the court accepts the content that should be disclosed, and requires self-examination of whether there are any matters such as capital occupation, illegal guarantees, and fulfillment of commitments.
In practice, in most cases, restructuring investors will be introduced to provide cash for the company to repay debts and resume operations. The rules clarify the disclosure requirements for public solicitation and other methods to confirm reorganization investors, and urge relevant parties to promptly disclose the basic information of reorganization investors, related relationships, investment agreements, payment of consideration, lock-in arrangements, and related commitments.
Regarding the price of the transferred shares, the “Guidelines” stipulate that those listed companies or managers should hire financial advisers if they are lower than the closing price of the company’s shares on the day the investment agreement is signed by 80% to reorganize the rationality of the investor’s price and the basis for pricing, etc. Issue special opinions and disclose them.
In order to prevent some participants from participating in bankruptcy reorganization for the purpose of cashing out shells, the “Guidelines” regulate the implementation of the reorganization plan, share lock-up commitments of related parties, business plans and performance commitments.
The Guidelines clarify that if a reorganization investor becomes a controlling shareholder or actual controller after acquiring shares in a listed company, he or she shall promise to lock it in for 36 months from the date of acquiring the shares, while other reorganization investors lock it in for 12 months; the reorganization plan involves In the case of commitments, the parties involved in the commitment must have a clear deadline for performance, fully disclose the content of the commitments, performance capabilities and other important issues, and fully demonstrate the feasibility of the commitments.
More and more listed companies are joining the restructuring force
The “Opinions of the State Council on Further Improving the Quality of Listed Companies” requires that diversified exit channels for listed companies, such as active delisting, mergers and acquisitions, and bankruptcy reorganization, be unblocked. Against this background, the number of listed companies that have implemented bankruptcy and reorganization in the A-share market has increased in recent years.
According to the recent A-share market announcement, currently,*ST Huaying、*ST Shida(Human Rights Protection) and many other companies are undergoing restructuring. in,*ST Hemei(Rights protection),*ST Soling(Rights protection),*ST Big Collection(Rights protection),*ST HNA(Rights protection),*ST Kerry(Rights protection), *ST Shida and other reorganization plans have been implemented.
“For the majority of shareholders, reorganization is a good thing. Although part of the interest is transferred, it is better than delisting and bankruptcy liquidation. The reorganization system has a certain value, but it should also prevent a few companies from flickering reorganization.” Securities rights lawyers said.
With the recent implementation of the reorganization plan*ST Kangmei(Human Rights) (600518.SH), the company’s misrepresentation liability dispute case became the first securities class action. According to the judgment, 52,037 investors in the *ST Kangmei case awarded a total of approximately RMB 2.459 billion in compensation.
These compensations are currently settled through reorganization. On December 21, 2021, the first class action will be executed, and 52,037 investors will be repaid about 2.459 billion yuan in cash, debt-to-equity swaps, and trust income rights.
In addition to freeing the debtor from the dilemma of bankruptcy, the purpose of bankruptcy reorganization is to restore the operational capabilities of listed companies, which plays an irreplaceable role in resolving corporate risks and preventing social problems caused by corporate bankruptcy.
However, after the reorganization of listed companies, the demerits of violations of laws and regulations still exist.for example*ST Liyuan(Rights Protection), announced on January 4, 2021 that the implementation of the reorganization plan has been completed. But not long after, on May 26, 2021, the company received an “Investigation Notice” issued by the China Securities Regulatory Commission, and was investigated by the China Securities Regulatory Commission for suspected violations of information disclosure.
In addition, in July 2021, the exchange issued a letter of concern, requesting *ST Liyuan to re-verify whether the bank accounts of the company and its subsidiaries within the scope of the consolidated financial statements have been unfrozen, combined with the company’s production and operation status and whether there is any subsequent potential legal disputes , Indicating whether the company’s main bank account is at risk of being frozen again.
In response, *ST Liyuan replied that the company re-checked all bank accounts within the scope of consolidation, and there was no freezing situation. The current production and operation are normal, but the company’s main bank accounts may still be frozen again.
According to the announcement, *ST Liyuan is involved in a dispute over liability for false statements. As of December 31, 2021, it has received 230 litigation materials, involving a total of 160 million yuan in litigation. In addition, the company has not disclosed two small-sum litigation and arbitration matters, involving a total of 196,800 yuan.
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