The Shanghai Stock Exchange has launched special actions to prevent and control the credit risk of controlling shareholders and actual controllers of listed companies, The Paper reported.
Among Shanghai-listed companies, some have revealed that a high proportion of equity is pledged by controlling shareholders, leading to a risk of liquidation when the stock price fluctuates.
The SSE has issued supervisory letters to and conducted interviews with about 50 risky firms. There are about 150 companies which have pledged more than 80% of their stakes.
Meanwhile, the SSE also targets companies with an obvious motivation to cash out. These asset transactions are usually paid for with large sums of cash, and the transaction counterpart is a related party to the controlling shareholders of the listed company.
Also, the SSE aims to crack down on controlling shareholders’ misappropriating company funds for other purposes.