Interpretation and reflection on the struggle between Gome s equity and control

The beginning and end of the struggle for control of the United States.

July 2006.

Gome's acquisition of Chen Xiao's "Yongle", the combination of the "boss" and the "third" in the home appliance industry, brought Chen Xiao and Huang Guangyu together, and Chen Xiao served as the president of the "new Gome". Huang Guangyu once publicly said that he could no longer find a more suitable candidate for president.

End of 2008 Early 2009.

Huang Guangyu was investigated for economic crimes, and Chen Xiao was pushed to the forefront, and only then did he begin to have real power. However, due to the uncertainty of Huang Guangyu's case, Chen Xiao himself and the Gome management team still maintain their awe for Huang Guangyu.

However, after Huang Guangyu was detained, he repeatedly issued instructions to Gome's management, emphasizing his personal status in Gome, demanding that Gome take measures that would benefit him personally and reduce his criminal punishment. But the program was not accepted.

June 2009.

Chen Xiao successfully introduced Bain Capital, saving Gome but hurting Huang Guangyu. A person familiar with the matter said that even if there was a conflict between the two at that time, it was not made public, and the introduction of Bain was the direct cause of the break between Huang and Chen.

July 2009.

Including Chen Xiao, 105 Gome executives received a total of 100 million shares. Huang Guangyu was very dissatisfied with the board of directors after learning about it and asked for the incentive mechanism to be abolished, but he was not accepted.

May 2010.

At the Gome shareholders' meeting, Huang Guangyu vetoed five consecutive votes to appoint Zhu Jia, managing director of Bain Investment, and three others as non-executive directors, but was vetoed by the board of directors. The contradiction has now become public.

On August 4, 2010, Huang Guangyu sent a letter requesting the convening of a general meeting of shareholders to remove Chen Xiao and other positions, officially opening the curtain of the battle for control of Gome.

August 2010.

Shinningcrown, which is wholly owned by Huang Guangyu, sent a letter to Gome Electric, requesting that a shareholders' meeting be convened and that Chen Xiao and Sun Yiding be removed from their positions. A day later, the board of directors of Gome rejected Huang Guangyu's request and filed a lawsuit with the High Court of the Hong Kong Special Administrative Region, accusing Huang Guangyu of violating the rules around January and February 2008. At this point, the two of them have officially broken up, and there is no room for redemption.

September 28, 2010.

GOME's Extraordinary General Meeting was held at the Regal Hongkong Hotel in Causeway Bay, Hong Kong.

Gome's major shareholder Huang Guangyufang's motion to remove Chen Xiao as chairman of the board of directors was not passed, and Huang Guangyu's sister Huang Yanhong and private lawyer Zou Xiaochun were not elected as executive directors, and Chen Xiao will continue to be at the helm of Gome.

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The battle for control of Gome was mainly invested by Sino-US business groups and Warburg Pincus. The motivation for this competition is mainly due to the position and potential value of Gome Electric's nuclear Huiji in the Chinese market. GOME is one of the largest home appliance retailers in China, with a relatively strong sales network and a loyal customer base.

At the same time, GOME also owns some important assets, such as real estate and shops, which have great potential in terms of mortgages. <>

Sino-US Business Group, Warburg Pincus and other institutions hope to capture the above potential value by controlling Gome Electric. However, the process of struggle for control is very complex and intense, not only involving share distribution, operation and management, etc., but also affected by factors such as policies, regulations and regulatory environment. <>

In this battle, the change of control will have a profound impact on the operation and future development of Gome. If the change of control can be successfully realized, it may bring about a new management model and strategic adjustment, and promote the development and expansion of GOME. However, if the change fails, it will cause Gome to face problems such as unstable operation, stock fluctuations, and management chaos.

Overall, the battle for control of Gome reflects the business competition in the Chinese market and the entanglement of interests between capital. In the future, this kind of competition will continue to exist and have an important impact on China's economic development.

Analyze the motivation and effect of the control struggle of Gome Electrical Appliances For this problem, the motivations and effects of the control struggle of Gome Electrical Appliances are as follows: Motivation: uneven distribution of benefits:

Gome Electric Tansui was co-founded by Huang Guangyu and Zhang Jindong, but as the company expanded, the two sides had disagreements on the distribution of benefits. Huang Guangyu believes that he should have more equity and control, while Zhang Jindong believes that he has made a greater contribution to the operation of the company. Management Mistakes:

The financial crisis in 2008 had a great impact on Gome Electric, and the company faced operational difficulties. At this time, the company's management did not take effective measures to deal with the crisis, which led to the company's performance declining, further exacerbating the tension of the equity competition. Intensified competition in the industry:

As a leader in China's home appliance retail industry, Gome Electrical Appliances faces competition from e-commerce platforms such as JD.com and Tmall, as well as competition from traditional retail companies such as Suning. This intensification of competition has also intensified the equity competition within Gome. Effects:

Affected company performance: The equity competition has exacerbated the internal disputes within the company, affected the company's management and operations, and led to a continuous decline in the company's performance. The company's image has been damaged by Rang Haobu:

In the process of equity competition, the two sides attacked and smeared each other, resulting in serious damage to the company's image and a negative impression of the company among consumers. Shareholders' interests are affected: The company's stock price has been continuously improved due to equity competition, and the interests of shareholders have suffered serious losses.

Improvement of corporate governance structure: Equity competition has led to an improvement in corporate governance structure, and the company has introduced new shareholders and management, which has helped to improve the company's management level and competitiveness.

The dispute between China and the United States is indeed a historic event, but I am not very interested in the incident itself, but in the legal basis on which the two sides fight and the organizational structure of the company under the framework of the Chinese Company Law. I have encountered a similar incident in Shandong, and I have specially purchased a company method for this purpose, and I read it in detail to answer some doubts in my heart.

1. Who is GOME?

GOME Electrical Appliances Holdings**** (HKSE: 0493) is a conglomerate company listed on the Hong Kong Stock Exchange. The company is registered in Bermuda.

First of all, the company is registered in Bermuda, indicating that Gome is an "offshore company".

Definition of offshore company: In recent years, some countries and regions in the world (most of which are island countries) have formulated and cultivated some particularly relaxed economic zones by legal means, which are generally called offshore legal areas. The so-called offshore company refers to a limited liability company or shares established in an offshore legal area.

There is no tax on such companies, only a small annual management fee is charged, and at the same time, all major international banks recognize such companies to facilitate the establishment of bank accounts and financial operations. It has the three characteristics of high confidentiality, tax burden reduction and exemption, and no foreign exchange control. The world's more famous offshore legal areas include the British Virgin Islands, Bermuda, Cayman Islands and other places.

2. What is the difference between a limited liability company, a share **** and a holding company?

According to the provisions of the Company Law of the People's Republic of China, a limited liability company refers to an enterprise legal person in which shareholders are liable to the company within the limit of their subscribed capital contributions, and the company is liable for the company's debts with all its assets. Shares **** refers to the enterprise legal person in which all the capital is divided into equal shares, the shareholders are liable to the company to the extent of the shares they subscribe, and the company is liable for the company's debts with all its property. There is no definition or provision of a holding company within the framework of the Company Law of the People's Republic of China, and the so-called holding company actually refers to an "offshore holding company".

An offshore holding company is a type of company that is set up offshore and then operates by setting up a physical branch in another "non-tax haven area".

3. Why is only the major shareholder Huang Guangyu entitled to hold a general meeting of shareholders in Hong Kong?

Because Gome is an offshore company registered in Bermuda, it is based on the Bermuda Companies Act. It stipulates that an overseas company must hold a general meeting of shareholders every calendar year. Unless otherwise provided in the Articles of Association, a general meeting of shareholders may be convened with only one person present.

Notice of an annual general meeting or an extraordinary general meeting shall be served at least five days before the commencement of the meeting, and notice of less than five days shall be agreed by the shareholders. The Articles of Association may provide for a longer notice period. At the request of shareholders holding not less than 10% of the paid-up share capital, the directors shall preside over the convening of an extraordinary general meeting.

A general meeting of shareholders may not be held in Bermuda.

Let's take a look at the shareholding structure of Gome Electric: Huang Guangyu family, Bain, Da Mo, JPMorgan Chase 6%, Yongle executives 5%, Fidelity, Chen Xiao, and others. Among them, only Huang Guangyu has more than 10% of the shares, and has the right to convene an extraordinary general meeting at any time.

Summary. Management dilutes the control of the majority shareholder by bringing in a new outside investor, Bain Capital, and colludes between management and outside investors by granting Bain Capital preferential financing terms.

Management dilutes the control of major shareholders by bringing in a new outside investor, Bain Capital, and colludes with management and outside investors by giving Bain Capital preferential terms for capital melting.

The board of directors of Gome Electric, with Chen Xiao as the chairman of the board of directors, will take three steps in order to seize the control of Guowu Zaomei: first, to obtain management control and realize "insider control"; The second is to dismantle the debt-to-equity swap of Beikuxing capital and obtain the foundation.

Huang Guangyu lost control, but he is still the largest shareholder of Gome, and he will not issue additional shares to dilute Tangerine Naihuang, and Huang's position in Gome will not be shaken. According to the current equity ratio, as long as Gome makes money, Huang can get 1 3 income. Gome Huang Guangyu Fangmei has passed the resolution, which does not mean that shareholders are biased towards Chen Xiao, but they are worried that the turmoil will cause drastic changes in the stock price, so they choose to maintain the status quo.

As long as Huang Fang has the right person to control Gome, the shape of the jujube Wu Sui style will change, so the result has little impact on Huang, but the control is gone, and the ownership is still in hand.

Gome shareholders' meeting turmoil Major shareholders vetoed Bain's directors.

More than 8 months after Bain & Company invested in Gome Electric, and when Gome Electrical Appliances was coming out of the crisis and recovering positive growth, the major shareholder of Gome Electric, which owns the equity, suddenly made a statement at the annual general meeting of shareholders on May 11, 2010, and voted against the three non-executive directors proposed by Bain Liangtuan Investment. Huang Guangyu demanded the removal of Chen Xiao and the escalation of the war between China and the United States.

At 7:30 p.m. on August 4, 2010, Chen Xiao, the current chairman of the board of directors, received a letter from Huang Guangyu on behalf of the company, requesting that an extraordinary general meeting of shareholders be held to revoke Chen Xiao's position as chairman of the board of directors and Sun Yiding, the current vice president of Gome, as an executive director. At this point, the contradiction between Huang Guangyu and the current management of Gome Electric Appliances has been revealed. Gome declared war on Huang Guangyu.

On the evening of August 5, 2010, Gome Electric (00493) issued an announcement on the Hong Kong Stock Exchange, announcing that it would prosecute Huang Guangyu, an indirect shareholder and former executive director of the company, to seek compensation for the alleged violation of the fiduciary duty and trust of the company's directors in the repurchase of the company's shares around January and February 2008.