By Tan Haojun
Translated by Chen Shuling
The news that Yu Qiuyu, a cultural celebrity, will get sudden rich with Xujiahui to be listed has brought a heated controversy. On Oct. 29th, Ye Tan, a financial commentator, strongly questioned that Yu was suspected of misappropriation of State assets. Chinese Version>>
In this query about the transformation of Xujiahui, we can not just point the finger of blame to Yu Qiuyu as more than 40 other natural persons are also involved in this transformation.
But the operation procedures and measures in the transformation are worth pondering.
An enterprise with good asset quality and operation condition suddenly decided to dismiss the conference of shareholding employees and transferred their shares to 31 company's management staff and 4 outside natural persons including Yu Qiuyu. This deal itself was strange enough.
First of all, can this transfer of shares be regarded as the system transformation? According to the information provided by the enterprise, this share transfer is an internal restructure. We have to ask that since it is the internal restructure, the shares can only be transferred to the enterprise employees other than the persons outside the enterprise. Then, why are there four external natrual persons such as Yu Qiuyu? What"s the reason?
The secondly, how do the four external natural persons including Yu Qiuyu obtain the shares? In accordance with current national laws and regulations, transfer of shares must follow a fair, open and impartial manner, with the implementation of public bidding, public transfer and public trade. Then, have such procedures been followed in the share transfer to the four external natrual persons? By what kind of methods did their shares be obtained? Although some experts hold the opinion that Yu Qiuyu and others"obtainment of shares is not in violation of Transformation of Xujiahui Needs Re-examination
The news that Yu Qiuyu, a cultural celebrity, will get sudden rich with Xujiahui to be listed has brought a heated controversy. On Oct. 29th, Ye Tan, a financial commentator, strongly questioned that Yu was suspected of misappropriation of State assets.
In this query about the transformation of Xujiahui, we can not just point the finger of blame to Yu Qiuyu as more than 40 other natural persons are also involved in this transformation.
But the operation procedures and measures in the transformation are worth pondering.
An enterprise with good asset quality and operation condition suddenly decided to dismiss the conference of shareholding employees and transferred their shares to 31 company's management staff and 4 outside natural persons including Yu Qiuyu. This deal itself was strange enough.
First of all, can this transfer of shares be regarded as the system transformation? According to the information provided by the enterprise, this share transfer is an internal restructure. We have to ask that since it is the internal restructure, the shares can only be transferred to the enterprise employees other than the persons outside the enterprise. Then, why are there four external natrual persons such as Yu Qiuyu? What's the reason?
The secondly, how do the four external natural persons including Yu Qiuyu obtain the shares? In accordance with current national laws and regulations, transfer of shares must follow a fair, open and impartial manner, with the implementation of public bidding, public transfer and public trade. Then, have such procedures been followed in the share transfer to the four external natrual persons? By what kind of methods did their shares be obtained? Although some experts hold the opinion that Yu Qiuyu and others'obtainment of shares is not in violation of regulations as listed companies have had such cases before. This expert needs to answer whether previous case means conformation with regulations. If it does, can we consider that since there have been many problems before with loss of state-owned assets, no investigation and penalty would be required for the future recurrence of similar problems. Obviously, 'previous case version'doesn't hold water.
The thirdly, was there any loss of state-owned assets in this transfer of shares? To judge the problem of state-owned assets'loss in share transfer, the key point is whether the transfer price is reasonable and legitimate. As stated in the enterprise offer propectus, the transfer price is determined in accordance with the net assets of enterprise. Clearly, this is also a doubtful point. As the net asset is an important other than an only factor in the determination of share transfer price in accordance with the relevant national laws and regualtions. The transfer price also depends on the operation situation, beneficial result and growth of the enterprise. Then, were these factors taken into consideration for this share transfer price? What's the basis for that? What's noticeable is that only a few years after transformation, the enterprise issued bonus shares and had the listing conditions. Undoubtedly, the operation situation of the enterprise is not bad. It's not reasonable and legitimate to determine the transfer price only according to the net assets. There is suspicion of loss of state-owned assets.
The fourthly, where does the capital for purchasing shares come from? One problem worthy of concern and attention is that in the transformation process, public funds would often be used by the transferees to buy public assets. Then, in this process of share transfer, are there same problems? Where did the over 40 natural persons get the capital from to buy the shares? And how did the capital be used? The problem must be investigated thoroughly. Otherwise, it is hard to dispel exterior doubts.
The fifthly, were there any 'rat trading' problems in the share transfer? 'Rat trading' problem always exists in the process of enterprise transformation. That means the enterprise operators deliberately make the benefit and asset quality poor before transformation in order to aquire the enterprise assets at low price. Then, are there any similar problems in the process of share transfer? Otherwise, why for the shares transferred with only net assets, could the enterprise issue bonus share and get listed just in a few years?
Therefore, re-examination must be made for the transformation of Xujiahui. In the various aspects such as the evaluation of assets, procedure of transformation, the process of asset transfer and the reasons for outside natural persons to purchase shares, review should be carried out to get knowledge and answer questions from outside about transformation of Xujiahui. Meanwhile, China Securities Regulatory Commission should decide whether the enterprise can be approved to be listed on the basis of comprehensive review and examination about transformation of Xujiahui. Otherwise, it will cause many contradictions.