Frequent Exposure Of A Shares Secret Past: "Drawer Protocol" Toxic

In market recognition, the drawer agreement is interpreted as an agreement which has not been disclosed in time or deliberately not known to the third parties. Drawer agreements of listed companies occur frequently in mergers and acquisitions, private placement and so on. The two parties often sign drawer agreements outside the contract to reconcile conflicting interests.

Why does the drawer agreement become the open secret of the A share market?

According to the twenty-first Century economic report's research data, secret disclosure has its unique macro background. Most of the exposed drawer agreements were disintegrated after the dispute between the two sides, especially the performance compensation drawer agreement, the reduction and compensation agreement, and then spread out in front of the public.

"Drawer protocol is often far from public information, which can better reflect the real motives and interests of the two parties." A private company in Beijing told the twenty-first Century business reporter.

And behind this can not be seen, the screen is more public investors. Once a dispute arises, the most injured ones are those who are deliberately concealed.

According to the investment bankers, "there are many kinds of mergers and acquisitions, and there are many kinds of situations." there are more cases in the actual operation of the market.

This gray area, which leads to capital ash production, obviously has a longer chain.

Negative influence fermentation

"In many cases, we believe that there are policies and countermeasures, and we have to make relevant drawer protocols to achieve certain goals. But such behavior will also do great harm to internal control and corporate governance. In November 22nd, an investment bank member of Guotai Junan was interviewed.

The growing number of disputes caused by the drawer agreement has thrown this hidden interest dispute on the table.

For example, 300287.SZ, a former listed company, and Ping An Trust, were in court because of disputes arising from the signing of the drawer agreement.

It started from a merger and acquisition many years ago. In 2016, Ping An Trust participated in the related supporting financing of Fei Li Xin, but also asked the controlling shareholders of the listed companies to sign the bottom drawer agreement.

However, with the subsequent market downturn, Ping An Trust related products are about to expire, Ping An Trust requires the Fiat letter shareholders to fulfill their obligations of differential compensation.

As major shareholders of listed companies fail to fulfill their obligations under the agreement, Ping An Trust applies to the court for litigation preservation. As a result, the shareholding of controlling shareholders and related parties of listed companies has been frozen, which has also led to the market's concern about the company's "equity crisis".

The dispute has aroused the concern of regulators. After the exposure of the Shenzhen Stock Exchange, a letter of inquiry was sent up quickly, requiring the listed company to explain whether the controlling shareholder's pledge was frozen or whether there was a risk of change in the control rights. At the same time, the key points mentioned are whether the two sides have fulfilled their obligation to disclose information and whether they comply with the relevant regulatory provisions.

"Drawer agreement violates the concept and direction of information disclosure requirements of listed companies." Northeast Securities Research Director Fu Lichun said, "for other shareholders of listed companies, especially public investors, it must be unfair, there is suspicion of concealment."

Judging from the final judicial precedent, the current law supports the rights and interests of drawer agreements.

"This is like two sides of a coin. If it does not support the legitimacy of the drawer agreement, it will obviously hurt the financial side of the investment and financing." The investment bankers said frankly.

However, "drawer Protocol" also brings many hazards. Especially for small and medium investors, the existence of the drawer agreement is obviously difficult to assess the actual value of the company, because a large part of the information is hidden underground, so it is inevitable to make a wrong investment judgment. Other respondents believe that.

From the case exposed, the disputes arising from similar agreements are also likely to trigger the control crisis of listed companies, which will bring greater negative effects to the listed companies. On the other hand, the existence of such agreements also reflects some loopholes in the governance of some companies.

"Every aspect will have some impact. This is a hidden bomb." The foregoing agencies said frankly.

However, on the other hand, there were also some agencies who pointed out that drawer agreements played a catalytic role in the merger and acquisition of listed companies to a certain extent.

"For example, whether the trading partner of the reorganization plan sign the performance commitment agreement is likely to affect the success or failure of the whole scheme, and in some cases, if the withdrawal of the original controlling shareholder of the company after getting the shell is protected by the relevant interests without such agreement, it will also affect whether the loan can be made." A partner of a private equity firm in Beijing told the twenty-first Century business reporter.

In practice, many listed companies also show the meaning of "forced".

In addition, there are some institutions in the drawer agreement with the listed companies after the dispute, but also considered that this is a normal business practices and wind control means, there is nothing wrong.

But it is worth noting that the biggest problem of drawer protocol is that it violates the relevant provisions of information disclosure. Besides, in the content of the agreement, there are often grey areas or even violations of laws and regulations. As a result, the drawer protocol has been strictly regulated by regulators.

Why rise?

"In 2015 and 2016, the mergers and acquisitions and refinancing markets were very hot, when the large shareholders of listed companies signed the bottom guarantee agreement." The private placement agency said.

Part of the reason is that the fundamentals of some listed companies are not very good, and it is difficult to increase.

In the case of 300415.SZ, there are also disputes about drawer protocol. At that time, the Shanghai science and technology two shareholder, the capital asset management partnership (limited partnership) of Shanghai, pointed out that the drawer agreement was signed with the major shareholder, the Company Limited, but the major shareholder failed to cash in on the guaranteed earnings and violated the cooperation agreement. Therefore, an application for property preservation was submitted to the second intermediate people's Court of Shanghai.

It was also in 2016 that Shanghai's Tatu was involved in the increase of the ring technology. The average annualized yield of its shares was no less than 8%, otherwise the difference would be compensated.

At that time, Shanghai reached 4 million 995 thousand and 300 shares at 32.03 yuan per share, and continued to buy 310 thousand and 100 shares in the two tier market at 32.17 yuan per share after the completion of the issuance.

The following events are widely known. Over a year later, the two sides quickly turned their faces.

Although there is no doubt that there will be a drawer protocol as a catalyst in some cases, the false prosperity brought by this situation will also adversely affect the steady development of the market.

"More defects still exist at the level of compliance. And this kind of drawer agreement is frequent, and it may overdraw the market. " The broker dealer pointed out.

In view of the drawdown agreement for reduction of compensation, some listed companies have to manipulate the market to avoid compensation in order to raise the share price, thus causing more market problems.

According to our reporter's understanding, a listed company has signed a related agreement with the capital before this increase. The agreement stipulates that if the share price is lower than the XX amount, the major shareholder of the listed company will have to make a compensation. But then the company's share price fluctuated, and the lowest price was even less than half of the agreed price. In order to avoid possible compensation, the company found a two tier market investment institution to pull up the stock price.

This "insider information" has been circulating in public private funds and cattle scattered, and has become the vane of some capital stocks.

"Bet big shareholders will do everything they can to save themselves." One investor pointed out.

In accordance with this logic, the grey chain of capital triggered by the drawer agreement has been further extended, even involving the red line problem of insider trading.

"The most hurt is the small and medium-sized investors." The aforementioned body members sigh with emotion.

"Mergers and acquisitions market drawer protocol frequent, the two sides generally exist for their own interests and private agreement on the gambling agreement. But all of these have the risk of sacrificing the interests of small shareholders and realizing the interests of large shareholders. With the market becoming loose again, such incidents deserve more attention. The foregoing investment bankers were interviewed.

When will the grey area be solved?

"There will be no drawer agreement without any reason, which is the inevitable outcome of untrustworthy soil." A brokerage analyst told the twenty-first Century business reporter.

In its view, in addition to violates the basic principles of honesty, drawer agreements are likely to lead to incomplete disclosure of information and misleading investors' investment decisions.

"Regulators should strengthen supervision, strictly clean up and punish according to rules." Fu Lichun thinks.

In fact, the relevant listed companies have been punished by regulators.

In the case of Xin Yang Feng, the SFC once imposed penalties on information disclosure, short term trading and manipulation of the securities market of its shareholders.

According to the disclosure, in 2014, Xinyang Feng backdoor was listed, and the owner of the original shell was expected to reduce its 12.17% stake in the listed company and withdraw from it after the reorganization was completed. In accordance with the agreement with the foreign group, the foreign exchange group itself or designated third parties, through the large trading platform of Shenzhen Stock Exchange, determines the price to buy all the stocks that it intends to reduce, and the lower limit is 12 yuan per share.

In order to fulfill its promise, the subsidiary of Yang Feng Group invested four information management products to undertake the reduction of shares in the two market, and at the same time, in order to circumvent the compensation caused by the stock price below 12 yuan, the foreign exchange group also allowed its subsidiary to trade the new foreign abundant stock in the two level market through the customer loan, and raised the stock price.

The securities and Futures Commission pointed out that the relevant actions constituted manipulation of the securities market, illegal disclosure of information, illegal transactions in the short term, and strict penalties for those responsible.

And some private institutions that cooperate with shareholders of listed companies to do such operations are also being watched by regulators.

Previously, the fund association pointed out that some private equity funds were invested in the private sector fund, but they were investing in high interest rates and making use of the "capital pool" to earn huge interest margins. They were called equity investments, but they were in fact a single item lending business by compulsive repurchase and other provisions or drawer agreements. They even believed that the actual controllers and their affiliates were the main purpose of the merger, and some private equity funds became illegal parachutes such as illegal fund-raising.

In addition, the first time the regulators asked whether they met the requirements of information disclosure and whether the contents of the drawer protocol were irregularities after the dispute had been caused by the drawer agreement.

The industry will be clear and will continue.