Inventory class A share price divorce case, what are the legal points of stock company equity division?
Author | Yinghe Family Lawyer
9 billion huge break fee
On April 4, 360 Company announced that the company's chairman, Zhou Hongyi, had divided his property due to the dissolution of his marriage with Ms. Hu Huan, and planned to transfer his assets through non-transaction meansThe directly held 360 (601360) shares of 446,585,200 shares (approximately 6.25% of the company's total shares) were transferred to Ms. Hu Huan.
Reminder announcement on changes in shareholders' equity
As of the afternoon of April 4, the closing price of 360 company's stock market was 20.08 yuan. From this calculation, Mr. Zhou Hongyi's equity divided by divorce is now worth more than 9 billion yuan.
360 Company's closing price on April 4
It is worth noting that 360 plans to launch a domestic big language model "Red Boy". According to reports, the product is currently in the closed beta stage. Due to the ChatGPT concept, 360's share price has also taken off, and the share price has risen by more than 186% since February. Mr. Zhou Hongyi and Ms. Hu Huan rushed to split the divorce equity at the peak of the share price.
360 company stock price chart
360 Company's "Reminder Announcement on Changes in shareholders' equity" shows that Zhou Hongyi, the actual controller of the company, and Hu Huan have negotiated amicably, have gone through the formalities for dissolving the marriage relationship, and made relevant arrangements for share division and other matters. Zhou Hongyi intends to divide the 6.25% shares of the company directly held by him into Hu Huan's name. This change in equity will not lead to changes in the company's controlling shareholders and actual controllers, and does not involve changes in the company's control rights.
Before the change of equity, Mr. Zhou Hongyi directly held 821 million shares of the company, accounting for 11.49% of the company's total share capital (excluding the number of shares in the repurchase account, the proportion is 11.73%); and indirectly held shares of the company through Qixin Zhicheng. The above shares are all free float shares. Hu Huan did not hold shares of the company before the change of equity.
Changes in shareholder shareholding of 360 company
In addition, the announcement pointed out that Ms. Hu Huan did not work for the company or its subsidiaries, nor did she participate in the company's production and operation management. This change in equity has no material impact on the company's operation and management, and there is no situation that harms the interests of listed companies and other shareholders. As of the disclosure date of the announcement, Zhou Hongyi and her concerted actions have no plans to increase or decrease their holdings of shares in listed companies in the next 12 months; Ms. Hu Huan has no plans to increase her holdings of shares in listed companies in the next 12 months, and has no plans to reduce her holdings of shares in listed companies in the next 6 months.
Zhou Hongyi and the woman behind him, Hu Huan
Zhou Hongyi, who was named "Red Clothes Cult Master" and "Red Clothes Cannon" by the outside world, because his name is homophonic with Red Clothes, and Zhou Hongyi also uses a red shirt as his logo, and wears red clothes when attending business events and media interviews. Zhou Hongyi has a sharp personality and dares to tell the truth. He once led 360 and Tencent in a "3Q war", which attracted the attention of the whole network.
The red top is Zhou Hongyi's signature dress
Contrary to the flamboyant style of the "red-clothed cannon", Zhou Hongyi's wife, Hu Huan, is so low-key and mysterious that few people in the outside world know her name, let alone her background information.
It is rumored on the Internet that Zhou Hongyi took a group photo with his wife Hu Huan
In March 2018, the 360 return to class A shares listing ceremony was held in the Shanghai Stock Exchange, the day Hu Huan appeared as a representative of 360 shareholders, with Zhou Hongwei rare frame, suddenly aroused outside discussion.
Zhou Hongyi once told the story of his relationship with Hu Huan in "Subversive - Zhou Hongyi's Autobiography", and the public got to know the "good inner helper" behind the red-clothed leader.
Class A share breakup divorce case
360 is not the first company in the class A share market to experience a "sky-high divorce case".
On May 29, 2022, Kangtai Bio, which had a market value of nearly 100 billion yuan at that time, released a detailed report on the change of rights and interests. Chairperson Du Weimin divorced Yuan Liping. When the property was divided, Du Weimin transferred his 161331675 shares of Kangtai Bio to Yuan Liping, accounting for 23.99% of the company's total shares.
Calculated at the closing price of 146 yuan/share on May 29, Du Weimin paid more than 23.50 billion yuan for the divorce, creating the highest break fee record for class A share.
Mr. Du Weimin, Chairperson of Kangtai Bio
On the evening of September 12, 2016, Beijing Kunlun Tech. Co. announced that Zhou Yahui, the actual controller and chairperson of the company, and Li Qiong reached an agreement on the share division. Li Qiong directly and indirectly received 278 million shares of Beijing Kunlun Tech. Co. shares. Based on Beijing Kunlun Tech. Co. s closing price of 25.33 yuan on September 12, 2016, this share is worth more than 7 billion yuan.
Legal Analysis of High-priced Divorce Cases
1. Divorce disclosure obligations of executives of listed companies
Is there an obligation to disclose the divorce of a listed company executive to the public?
The law also stipulates what should be disclosed:
laws and regulations
Measures for the Administration of Information Disclosure of Listed Companies
Former "Article 30"
If a major event occurs that may have a significant impact on the trading price of the listed company's securities and its derivatives, and investors are not yet aware of it, the listed company shall immediately disclose the cause of the event, its current status, and the possible impact.
(8) Shareholders or actual controllers who hold more than 5% of the company's shares have undergone significant changes in their ownership of shares or control of the company.
Now "Article 22"
If a major event occurs that may have a significant impact on the trading price of the listed company's securities and its derivatives, and investors are not yet aware of it, the listed company shall immediately disclose the cause of the event, its current status, and the possible impact.
……
If the controlling shareholder or actual controller of a listed company has a significant impact on the occurrence and progress of a major event, it shall promptly inform the listed company in writing of the relevant information it knows and cooperate with the listed company in fulfilling its information disclosure obligations.
According to the law, the divorce of the actual controller of a listed company is likely to lead to changes in the situation of shareholders or controllers holding shares or controlling the company, which should fall within the scope of information disclosure of listed companies.
However, the scope of disclosure obligations is limited to major events that affect the trading prices of listed companies' securities and their derivatives, so the disclosure content often only includes the division and transfer of the listed company's equity, and the need to clarify whether the equity division has an impact on the company's ownership structure and holding ratio. As for other property divisions between executives and spouses, they are not within the scope of disclosure.
According to the announcement of the 360 security technology joint stock company: before the change of rights and interests, Zhou Hongyi held 11.49% of the company's total share capital. After the change of rights and interests, Zhou Hongyi held 5.24% of the company's total share capital, and Hu Huan held 6.25% of the company's total share capital. That is, Zhou Hongyi's divorce only divided his direct holdings in 3
60to Hu Huan.
But in fact, Zhou Hongyi used "Tianjin Qixin Zhicheng Technology Co., Ltd." to indirectly hold 17.38% of the shares. As a major shareholder of 360 Company, Tianjin Qixin Zhicheng Technology Co., Ltd., if there is a major change in equity, it should also fulfill its disclosure obligations. However, from the announcement, there is no relevant disclosure information, and Hu Huan probably did not divide this part of the equity.
2. The significant impact of the equity split of listed companies
In listed companies and joint stock companies, divorce will have a significant impact on the control of the company when the husband and wife jointly hold shares. Once the equity is divided, it will inevitably lead to uncertainty about the ownership of the actual control of the company. Divorce often involves huge property compensation and changes in the equity structure.
Therefore, 360's announcement particularly emphasized that "this change in equity has no material impact on the company's operation and management, and there is no situation that harms the interests of listed companies and other shareholders." And "Zhou Hongyi and her concerted actions have no plans to increase or decrease their holdings in listed companies in the next 12 months; Ms. Hu Huan has no plans to increase her holdings in listed companies in the next 12 months, and has no plans to reduce her holdings in listed companies in the next 6 months.
"This will stabilize market confidence in the company and reduce the impact of the actual controller's divorce on the company."
Although this is the case, the impact of the actual controller's divorce on the company is sometimes fatal and sometimes devastating.
Taking Wuyang Technology (now "Wuyang Parking") as an example, shareholder Hu Yungao announced the divorce news on September 13, 2016, and the company's share price fell by 3.39% the next day.
Studies have shown that divorce events have a negative impact on stock prices in the short term. On the day of the divorce announcement, the stock price showed a downward trend, and the average cumulative decline was 5.5% on the tenth trading day of the announcement. However, in the long run, the stock price trend of most companies will not be affected by the divorce event, and it will continue the development trend of the industry and its own operation.
3. Real divorce? Fake divorce? All arrangements need to be made in advance
Due to factors such as time cost, privacy, and stable stock price, executives and shareholders of listed companies choose to divorce by agreement and split their shares better than divorce by litigation. Like Zhou Hongyi, they can continue to maintain control of the company and the stability of the company by signing a concerted action agreement.
If Zhou Hongyi is truly divorced, his advance planning and arrangement will greatly reduce the impact of the divorce on the company's business decisions and normal operations.
But what was interesting was that Hu Huan was already a Singaporean citizen, and the announcement of their divorce was after 360 launched the "360 Great Prophecy Model Product" on March 29, which coincided with the peak of 360's share price. The events were intertwined, and the timing of the occurrence was intriguing.
No matter whether it is a real divorce or a fake divorce, it is not an easy chess game for the executives of listed companies. It is necessary to comprehensively consider the development prospects of the industry, the direction of listed companies, changes in personal wealth, etc., in order to make overall arrangements and layouts.
conclusion
Nowadays, it is not uncommon for listed companies to divorce and split their shareholdings, and the value of their shareholdings is also increasingly high. The large amount of the target and the large social impact often make such cases attract much attention. It is a good policy to plan and arrange in advance, focus on the overall situation, and reduce the impact on the company's operation and shareholding structure.
Team Profile
Yinghe family lawyer team
Divorce Disputes | Inheritance Disputes
Family Equity | Property Agreement
Wealth Inheritance | Family Trust
Foreign marriage and family
The Yinghe family lawyer team focuses on legal services in the field of marriage and family affairs, specializing in litigation and non-litigation arrangements for marriage and family disputes (such as divorce, inheritance, cohabitation, separation of property, children and property relations after divorce, etc.); specializing in entrepreneurs' equity handling and company control arrangements in marriage and family disputes; specializing in entrepreneur family legal counsel, marital crisis response, family wealth inheritance, and foreign-related marriage and family affairs.
Liu Yanhua, Lawyer
Senior Equity Partner of
Member, Marriage and Family Law Professional Committee, Guangdong Lawyers Association
Member, Marriage and Family Law Professional Committee, Shenzhen Lawyers Association
Arbitrator of Wuhan Arbitration Commission (Wuhan International Arbitration Center)
Supervisor, Shenzhen Living Will Promotion Association
Volunteer lawyer for the "New Rain Project" and "Anti-Domestic Violence" projects of Vader Volunteer Center
Special guest of the Guangdong Provincial High Court column "Seeing the Law in the Bay Area"
Invited Lecturer, No Lawsuit Research Institute
Shenzhen Foreign Lawyers New Talent Pool Lawyers
School of Economics and Trade, Guangdong University of Foreign Studies
Lawyer Liu Yanhua has been practicing for more than ten years and has long been focusing on the field of marriage and family affairs. She has extensive experience in divorce litigation, inheritance litigation, foreign-related marriage inheritance, pre-marital and intra-marital agreements, marriage crisis response entrepreneurs' family legal counsel, and family wealth inheritance arrangements. Special guest on the TV program "Bay Area Watching the Law" of the Higher People's Court of Guangdong Province, and special guest on the TV program "Bill Tracking" of Guangdong Zhujiang Channel.
Editor-in-chief of the professional book "88 Lectures to Help You Solve Marriage and Family Law Issues" and one of the editors of "Extraordinary Family Affairs".
Cao Chenfan, lawyer
Attorney of
Lawyer Cao Chenfan has 8 years of experience in corporate legal work, specializing in handling cases in the cross-field of family affairs and family equity. He is a compound lawyer in the field of family affairs and companies. He focuses on case handling in the field of family affairs, analysis of difficult and complex cases, and research on cutting-edge legal issues. He is good at professional analysis of hot events and practical cases. Deputy editor of the professional book "88 Lectures to Help You Solve Marriage and Family Legal Issues".
U Tintin
paralegal of
Graduated from Guangdong University of Foreign Studies with a Master of Laws in Civil and Commercial Law, with 4 years of legal work experience, focusing on the research of legal practice issues in the field of marriage and family affairs, and specializing in legal document writing, contract negotiation and dispute resolution.
Han Shuo
paralegal of
Graduated from Zhongnan University of Economics and Law, with a Bachelor of Laws and a Bachelor of Economics and Finance, specializing in legal writing, with a combined background in law and economics.
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