Exploring the Impact of Non-compliance Reduction by Major Shareholders on the Interests of Small and Medium-sized Shareholders

Zhongnan University of Economics and Law, Wuhan, Hubei, 430073, China

^* Corresponding author: 202121080166@stu.zuel.edu.cn

Abstract

In recent years, major shareholders have been able to trade in the secondary market to realize their shareholdings directly. However, this has also given major shareholders a new way to reduce their holdings, and major shareholders have frequently chaotically reduced their holdings. Despite the promulgation of relevant decrees by the Securities and Futures Commission (SFC), the behaviour of major shareholders in the process of reducing their shareholdings through securities market manipulation that infringes on the rights and interests of small and medium-sized shareholders to obtain excessive gains has not yet been curbed. In order to reduce the infringement of the rights and interests of small and medium-sized shareholders by large shareholders and to maintain the order of the capital market, this paper summarises the previous literature results in related fields and quantitatively and qualitatively analyses the current situation of major shareholders’ illegal shareholding reductions in light of the new regulations on illegal shareholding reductions that have just come into force in 2024. After that, the motivation and economic consequences of large shareholders’ illegal shareholding reductions are analyzed in depth. Finally, this paper proposes effective and feasible measures from the perspective of protecting the interests of small and medium-sized shareholders. This study gives a comprehensive understanding of the impact of large shareholders’ illegal shareholding reduction on small and medium-sized shareholders. It provides new perspectives and ideas for the protection of small and medium-sized shareholders’ interests to protect the stability of the market and investors’ rights and interests.