Why LED companies frequently broke related transactions? How to break?

LED industry related transaction chaos

Recently, a listed company is revealed in "related transactions" - Rectangular lighting, the media reported that "the son shares rectangular lighting customers, check for Pinia photoelectric boss, but rectangular lighting previous notice did not disclose this information, in addition, rectangular lighting another big customer can Xin trade boss burst was also had to do business in a rectangular lighting. Such "related transactions" appears in the LED industry is not in doubt for the first time, in fact just this year by the financial media dig material LED listed companies have several, previously, Sanan optoelectronics, KingSun and other listed companies are "related transactions" of suspects, and factory and pattern almost like Fang Zhaoming: Chairman, relatives former employees or shares to become the company's major customers. The impact of the largest number of events occurred last year, FSL related party transactions, many investors jointly sued FSL and was accepted by the court, the recent news that FSL may face hundreds of billions of dollars in compensation. The same "related transactions and relates to an optoelectronic" photoelectric deal with more relaxed question, "KingSun executives pay penalty, supervisors to resign, to clarify the announcement" sincere apology and commitment from the vortex of public opinion, and because the transaction amount small to avoid administrative punishment; and it is in Sanan optoelectronics and media "questions" and "response" basically did not detect settle a matter by leaving it unsettled, why.

Regardless of how it was found related transactions to make enterprises by severe punishment is cheerful, what we say here is why "related transactions" often produce status in the LED industry, LED industry in the soil is not easy to breed "related transactions"?

What is related transaction

Between the transactions is the enterprise related party transactions, according to the accounting standards for Enterprises No. thirty-sixth of the Ministry of Finance issued in 2006 related party disclosure "(2006)" the provisions on enterprise financial and operating decisions, if one party control, jointly control the other party or the other party to exert significant influence, and the two party more than two parties or by the same party control, joint control or significant influence, constitutes a related party. The control here is the right to determine the financial and operating policies of an enterprise, and to obtain benefits from the business activities of the enterprise. The so-called significant impact, refers to the financial and operating policies of an enterprise to participate in the decision-making power, but does not determine these policies. The ways to participate in the decision-making include: in the board of directors or similar authority to send representatives to participate in the formulation of the policy, the exchange of managers, etc.. Any transfer of resources or obligations between the parties concerned, whether or not to charge the price, are regarded as related party transactions.

According to the above definition, rectangular lighting manager's "son", KingSun former executives, an optoelectronic three former employees, chairman of FSL, the son of the sister-in-law of investment companies to become their customers, will be questioned whether the existence of related party transactions.

Related party transactions are not necessarily a bad thing

In our understanding, related party transactions seem to be violations of the interests of shareholders, illegal and unfair transactions. In fact, from an objective point of view, related party transactions may bring good or bad impact on the enterprise. On one hand, due to the presence of both trading relationship, transaction cost can save a lot of business and other aspects of the negotiations, and the use of administrative power to ensure the priority of commercial contracts, so as to improve the efficiency of the transaction. From the negative perspective, because the transactions can use the administrative power matching transaction, which may make the transaction price, etc. in the non competition under the unfair situation, the formation of a violation of shareholders or part of the interests of the shareholders. In the LED industry was broke, related party transactions to see more of the negative aspects.

The reasons for the frequent association of LED industry

Improper affiliated transactions occur frequently, in fact, not only in the LED industry, China's Listed Companies in all walks of life there is this problem, and even the international well-known enterprises Sany is also difficult to escape. So, what is the reason for this phenomenon?

From the big side, involving the management of listed companies, the commission system, laws and regulations, etc., from an early age, the reasons attributed to the company management, the company structure, the company's profitability, etc..

First of all, from the environmental system. First, China's trade association of the listed company information disclosure system is not perfect, the relevant regulations of our country about the related transaction information disclosure of listed companies is not enough detailed and strict control measures, such as the lack of controlling shareholders' behavior, lack of protection mechanism of minority shareholders' interests, the disclosure of related party transactions, only the association both sides of the transaction and related transaction content, quantity, price, amount and the impact on the company, the lack of basic price related transactions, to related transactions with an opportunity. For example, the LED industry recently broke the "related transactions" mystery, son, son, sister and other related parties stem had no disclosures. Second, punishment mechanism for illegal related transactions is not perfect, even if it is found to exist unfair related transactions, will not be much punishment, which to some extent contributed to the occurrence of undesirable phenomena, such as KingSun optoelectronics and investors, securities regulatory agencies also did not get to the bottom, do things carelessly.

Secondly, back to the LED industry listed companies themselves. The first is improper earnings management