Listed Companies Assault Transactions "Fancy" To Adjust Profits, Shenzhen Stock Exchange Supervision "Sword" Strike Hard To Whitewash Financial Reports

The listed company reclaims its financial statements and evade the market by striking transactions, and appears relatively new means such as changing transaction consideration, changing performance compensation commitments, bankruptcy liquidation of subsidiaries, debt restructuring and so on.

In twenty-first Century, the economic news reporters tracked and understood that the Shenzhen Stock Exchange focused on the relevant companies, strengthened the precise supervision of the assault transactions at the end of the year, enhanced the effectiveness of supervision, and continued to promote the quality of listed companies.

For example, dozens of listed companies such as Yuan Li, Sinochem, CIGNA, Qianshan medical machine, Silver Jubilee technology, and Cixing share have received inquiries from the Shenzhen Stock Exchange about whether or not there is a surprise trading adjustment profit.

"At present, some listed companies rush to increase profits through various means, which on the one hand reduces the authority of China's listed companies to withdraw from the market, on the other hand, it also destroys the mechanism of survival of the fittest in the capital market and produces a certain negative externality." In January 9th, Pan Xiangdong, chief economist of new era securities, pointed out to reporters in twenty-first Century economic report.

It is very important to accurately identify the listed companies' assault transactions at the end of the year.

Surprise deals are full of tricks.

At the end of the year, assault trading has always been one of the main concerns of regulators.

In recent years, many listed companies have seen the sale of assets at the end of the year. For example, at the end of 2019, listed companies such as education, *ST, and new brand joined in the "sales force". *ST cloud voted to sell the "crops" and the land assets to the cloud investment agriculture and forestry. ST beauty and *ST de Hao continued to promote the "sell son" shell keeping operation.

In twenty-first Century, the economic news reporter noted that as the main way of striking profits, the sale of assets at the end of the year usually has many unusual characteristics, including abnormal transaction prices, selling high performing assets at a premium, and the concealed relationship between the counterparty's special status and the controlling shareholders, or the form is unrelated, but there may be interests or business contacts. The trading cycle is short, and some companies are transferring the following day after fulfilling the necessary examination and approval procedures in order to ensure the annual recognised disposal assets income.

In December 2019, Hua Control SEG had sold a deficit subsidiary at a premium of ten times, and was questioned by the Shenzhen stock exchange for the "fair price of the transaction price" and "assault trading to regulate profits". The confirmation of the transaction was just in December 31, 2019, and the expected investment income of 39 million yuan, plus the previous government subsidy from Hua control, could cover the losses of the first three quarters of the company.

In addition, the long recovery period is also one of the important features of "surprise revenue generation". Some companies can transfer the transaction to the agreed counterparty to pay a small amount of money, and the payment period of the remaining amount is longer.

There are some problems in the listed companies whose general performance is in the form of assault Trading (whitewashing profits). There are some problems in the performance of listed companies. Among them, ST shares, which are facing the risk of delisting, have the most incentive to adjust profits. Besides these performance factors, internal control is also an area of high incidence recently. A partner of a private equity firm in Southern China said.

It is worth mentioning that in addition to the traditional selling assets, related transactions and changing accounting estimates, in recent years, there have been some relatively new measures in the "assault" team, such as changing transaction consideration, changing performance compensation commitments, bankruptcy liquidation of subsidiaries, debt restructuring and so on.

In twenty-first Century, the economic report reporter learned that a listed company in Shenzhen in 2019 decided to reduce all the reduced prices into the current profits and losses by reducing the transaction price of the original purchase assets, making the net profit of 2019 net profit from deficit.

In addition, some companies adjust their performance commitments in a judicial way, such as the mediation of the amount of compensation between the two sides, the actual negative recourse of listed companies, and the adjustment of profits through the confirmation of compensation gains in the current year. There are also listed companies in the acquisition of underlying assets in order to complete the performance of gambling, the adjustment of performance compensation to reduce the amount, so as to adjust profits in the year to confirm the compensation income.

Three measures to fight hard

The Shenzhen Stock Exchange has adopted a series of regulatory measures against the "surprise trade" to regulate profits.

Through comprehensively combing the situation of risk companies, making advance anticipation, strengthening enquiries, strengthening the supervision of assault transactions at the end of the year, compacting the main responsibilities of intermediaries, and urging the three measures of diligence and conscientiousness, the Shenzhen stock exchange can accurately identify the year-end assault transactions of listed companies, and strictly supervise and clean up the market environment from various aspects, such as classified prediction, strengthening inquiry and so on.

According to the responsible persons of the listed companies in Shenzhen Stock Exchange, the Shenzhen Stock Exchange fully combed the company's losses for two consecutive years and losses in the first three quarters. It screened out the list of high-risk companies that might be able to regulate profits and avoid delisting by striking transactions, focusing on such companies' disposal of assets and related transactions and so on.

In view of the end of the year, the supervision department of Shenzhen Stock Exchange listed companies always maintain a high degree of regulatory sensitivity, and inquire about the essence of transactions and transaction motives.

"A number of continuous loss companies as a pre regulatory focus, one shows that regulators must resolutely put an end to or curb speculative speculation triggered by the delisting risk warning, significantly reducing the A share market shell resources speculation. The two is to improve the delisting system. Three is to improve the implementation of the delisting system, and promote the normal clearing of capital markets. Pan Xiangdong said.

In addition to the supervision of listed companies, regulators also continue to strengthen the responsibility of intermediaries.

"Strengthening the responsibility of intermediaries, showing the regulatory coverage of the supervision of the overall business risks, and gradually expanding the supervision of intermediaries to the whole business chain, which can effectively prevent illegal activities such as assault transactions at the end of the year, increase the authenticity of financial statements, enhance the effectiveness of the delisting system, and optimize the market environment, thereby improving the quality of listed companies, protecting the interests of investors, and promoting the long-term healthy development of the capital market." Pan Xiangdong pointed out.

"In recent years, regulators have further strengthened supervision over the profit adjustment behavior of listed companies at the end of the year. At the end of each year, the exchange level has inquired" inquiries "about the sale of assets that lack commercial essence, assault debt restructuring, accounting estimates, accounting policy changes, and the mention of assets depreciation reserve, which has a positive effect on the standardization of market development and the improvement of the survival of the fittest mechanism. They will increase their inquiries. In recent years, the number of listed companies delisting has increased significantly, and it also indicates that regulation is playing a role. A large brokerage investment bank department also said.