The confirmation of the validity of the agreement on increasing the minimum guarantee by the Supreme Court (217) Supreme People's Court No.492 civil judgment suddenly exploded in the circle of friends, and it seems that the agreement on increasing the minimum guarantee can rest easy from now on. However, the Supreme Court's judgment has its consistent problem that the analysis is often too rough, and many facts and factors have not been carefully considered. Therefore, based on the judgment of the court and the understanding of the previous guaranteed increase, this paper makes a preliminary analysis of this kind of behavior as follows.
The so-called fixed-income guarantee means that during the fixed-income process of a listed company, the major shareholder (usually the actual controller of the listed company) of the listed company promises the investors who subscribe for the fixed-income share, that is, if the investors' income at the expiration of the investment period is less than the promised amount, the major shareholder will make up for it; At the same time, the major shareholder will also agree with the investor that if the income obtained by the investor exceeds the promised amount, the investor needs to share the excess income with the major shareholder at a ratio ranging from 5: 5 to 3: 7, depending on the market environment at that time and the negotiating strength of both parties.
The relationship between all parties is as follows:
Generally speaking, all parties complete a transaction with guaranteed bottom and fixed income according to the following procedures:
For the following reasons, the guaranteed bottom and fixed income was once considered as a risk-free arbitrage model:
The above myth was not broken for a long time. The new regulation on fixed increase stipulates that the fixed increase price can only be issued at the market price, that is, the pricing benchmark date can only be the first day of the issuance period, which leads to uncontrollable fixed increase price, even much higher than expected. In addition, due to economic considerations, most of the stocks with a fixed guarantee are issued by listed companies with unsatisfactory future expectations, so that the trend of stock prices has fallen beyond expectations, making even the stocks obtained at a high discount earlier fall below the issue price.
The main participants in the guaranteed increase are investors, listed companies and major shareholders. Therefore, the whole transaction ultimately reflects the game of interests of these parties.
the fixed-income shares are issued by listed companies and subscribed by investors (to ensure the issuance, the major shareholders themselves are likely to subscribe for some shares). Based on the stock price of listed companies and their future expectations, the interests of all parties can be generally reflected in the following diagram:
The participation of major shareholders with guaranteed prices has broken the balance between the original investors and listed companies and distorted the relationship between supply and demand. The specific mechanism is as follows:
Because listed companies have the leading ability to issue new shares, the guarantee of major shareholders actually has the effect that listed companies have a higher success rate when the issue price of fixed shares is high.
in fact, it is rare to be in the first quadrant in fig. 4. When listed companies expect good results, major shareholders generally don't guarantee the bottom. Therefore, under normal circumstances, the high probability of investors participating in the fixed increase is the first quadrant in Figure 3 or the fourth quadrant in Figure 4. If you can get the increase in the first quadrant in Figure 4, it will be a very successful investment for investors. If you can have the investment opportunity in the second quadrant in Figure 3 or Figure 4, it is simply a bonus that ordinary related households can enjoy, which most investors dare not imagine.
In addition, the situation in the third quadrant in Figure 4 will also be another major situation for listed companies to increase their income. The main reason is that besides the stock price, there is also the listed companies' thirst for funds.
in reality, a large number of situations are that due to the good expectations of listed companies in the future, no matter in the first quadrant or the second quadrant, major shareholders usually do not guarantee the bottom. However, there is one exception, that is, if the major shareholder does not have enough funds to subscribe for a fixed increase, or the major shareholder is unwilling to face a series of constraints on reducing his holdings, the sharing agreement in the guarantee agreement constitutes a way for the major shareholder to make extra profits.
To sum up, the interest demands of all parties are different:
Investors: their only appeal is to gain the maximum profit with the minimum risk. Investors have a lot of money in their hands, and look for projects that meet their investment wishes in the capital market like hounds. Unfortunately, scarcity is the eternal theme of the market. Good projects, or listed companies' expected good projects in the future, are limited after all and cannot meet the needs of all investors. Due to the demand for capital security, investors are not so good at projects. Therefore, for a large number of projects that can be invested or not, the bottom of the major shareholder has become the last meat bun to lure investors.
from the perspective of the source of investors' capital, a large number of fixed-income funds came from banks, and banks only required low fixed income. On the one hand, this is the reason why investors require major shareholders to guarantee the bottom, because this transaction can at least not lose money, and it is easy for banks to pass the risk control review if there is a major shareholder guarantee; On the other hand, the major shareholder has pocketed the bank's income. If there is an excess, it will be a white gain for investors. Why not?
listed companies: the guarantee agreement enables the issuance of Dingding, which was originally difficult, to succeed, or at least increases the possibility of successful issuance and promotes the financing of listed companies. After obtaining financing, listed companies use fixed-income funds for production and operation to become bigger and stronger (of course, they may only raise funds). Moreover, the listed company itself does not provide a guarantee. From these perspectives, listed companies seem to be a sure-fire role.
major shareholder: in the whole transaction, it seems that only the major shareholder is the big loser. It needs to fulfill the obligation of 8% or even higher in some cases, and the corresponding right is only the share of excess income. From this perspective, it seems extremely unfair. However, there is no hate or love for no reason in this world. There must be corresponding reasons behind the large shareholder's willingness to make such a commitment.
first, listed companies need this fund urgently to complete a transaction. It may be debt repayment, investment in fixed assets, payment of consideration for a transaction, or even payment of intermediary fees. For whatever reason, listed companies don't have enough funds to pay, so they need to pay the ultra-high financing cost that will have a great adverse impact on their performance before they can raise the corresponding funds. The adverse impact on the performance will lead to major shareholders' heavy losses in the stock price or other unspeakable aspects, so that major shareholders think that even if they provide investors with a guarantee, they will not hesitate.
second, the guaranteed increase is not happening now. Smart and strong investors may set a mid-term covering line, but even so, the bottom guarantee will not happen immediately. The promotion of the success of the fixed increase on the stock price makes the major shareholders willing to take a chance and bet on the price when the stock is lifted.
third, as previously analyzed, listed companies that increase their income by using guaranteed prices usually have poor fundamentals. Correspondingly, the shares of major shareholders also have a high pledge rate. In this case, the major shareholder actually kidnapped a large number of financial or quasi-financial institutions as their stock price platform. In this case, no one wants to see any unsatisfactory performance of the stock price. As long as it is not a systematic problem (such as stock market crash or industry risk) or there is a major adverse change in the fundamentals of listed companies, otherwise everyone will help the stock price and will not let the stock fall too badly.
fourth, the major shareholder holds the control right of the listed company, and the income and life are guaranteed by the listed company, and all expenses can also be borne by the listed company. Therefore, as long as there is no problem with listed companies, they don't have to care too much about their personal gains and losses. Under such a background, major shareholders usually maintain the mentality of "don't care about eternity, only care about what they once had". What is more debt outside? On the contrary, if a listed company loses its control over the listed company in the event of a crisis, it will be an unbearable light in life for the major shareholders.
of course, investors don't want to hold the fixed shares for a long time after they get them. The so-called stock speculation as a (long-term) shareholder is the biggest failure. After investors get the stock, whether they sell it when it expires or continue to hold it for a while, their ultimate idea must be to sell the stock at a high price in the secondary market. Therefore, the ultimate undertaker of the fixed cost is undoubtedly the small shareholders. However, those who have no voice channels from beginning to end in the guaranteed bottom increase are the small shareholders who will ultimately bear the cost increase. In fact, the biggest difference between the guaranteed increase and PE investment gambling lies in this, that is, there are not only one major shareholder but also a large number of unspecified public shareholders in listed companies.
then, how will the interests of small shareholders be affected in the transaction of guaranteed bottom increase? This matter needs to be seen in at least four stages:
From the above four stages, it can be seen that the damage of minority shareholders' rights and interests is more due to the motivation of large shareholders to maintain the stock price and generate more violations. This is not direct for listed companies, but it is a potential hazard. Moreover, considering the general lack of trust obligations of major shareholders and directors of domestic listed companies, this damage to the interests of minority shareholders can not be ignored.
of course, if the stock is auctioned in a large area due to the market crash (that is, the first situation in the fourth stage), it may turn into a systematic risk, that is, a large number of listed companies' stocks enter the market due to the fulfillment of the guarantee obligation, resulting in a further large-scale and substantial decline in the stock price. However, this situation is more of a problem that financial supervision departments need to consider. Moreover, this situation is the result of the stock market crash, which further magnifies the effect of the stock market crash, but it is not the cause of the stock market crash.
legal disputes occurred in the guaranteed minimum wage increase. Before the Supreme Court handled the Guizhou labor surrender, some courts handled similar cases. No matter which case, the parties have no objection to the establishment of the contract. What is controversial is the validity of the contract. The relevant cases that can be publicly inquired are summarized as follows:
Although the number of the above cases is small, it basically reflects the court's thinking on the determination of the effectiveness of the guarantee agreement. Namely: 1. There are no prohibitive provisions on the validity of such clauses in laws and administrative regulations; 2. The guarantee agreement will not harm the interests of listed companies or creditors of listed companies (this principle was established in Gansu Shiheng case); 3. It has not harmed the interests of the public (this article is particularly important after Junkang Life Insurance case and Amarton case, that is, departmental rules can be used as the basis for identifying the interests of the public).
From the above, it can be seen that the thinking of the Supreme Court in handling such cases is basically certain, and it has been established in other cases that have been handled before. Whether the above ideas are appropriate or not, but rules are better than no rules. From the analysis in the second part of this paper, we can see that in the long run, points 2 and 3 are not so certain. After this case, at least from the point of view of the effectiveness of the contract, there is no doubt about the guaranteed increase.
as the share price of A-shares continues to fall, the period of lifting the ban on fixed increase has expired one after another, and it is not uncommon for many investors with fixed increase not only failed to get the expected income, but even fell below the issue price. It can be predicted that with the determination of the attitude of the Supreme Court in Guizhou, many major shareholders of listed companies will face the risk of such lawsuits, which will make the stock price of listed companies worse.