Business information shows that this private enterprise in Shenzhen, with a registered capital of 50 million yuan and established on February 27, 2020, has changed its investors four times within a year, all of them “Chinese”, the shortest interval of which is only 10 days.
On February 5, CNOOC Information Technology (Beijing) Co., Ltd. issued a statement, saying that the eight wholly-owned subsidiaries shown in the National Enterprise Credit Information Public Notice System under its name were false company registrations, of which CNOOC Information Technology (Beijing) Co., Ltd. was not aware and never agreed or authorized, and was not aware of the establishment and changes of these eight false wholly-owned subsidiaries and their subsidiaries at all levels. “The above eight companies and their subsidiaries at all levels have nothing to do with the Company, so please be vigilant in the community.
On February 10, the investor of Oriental Galaxy changed to Beijing PetroChina Technology Development Company, and the industrial and commercial information shows that this is a national ownership enterprise, which is wholly owned by CNPC. The company is wholly owned by China National Petroleum Corporation, and currently has 265 companies under its control.
China Newsweekly combed through the eight companies counterfeited by CNOOC and found that behind the intricate alternation of shareholdings, a gray chain of “pseudo-central enterprises” interests was hidden.
The “Chinese character” that is hard to distinguish from the real one
Ltd. would not have known that there were several more enterprises under its name if the partners had not asked. The registered capital of 11,206,700 yuan, to the domestic very small antenna earth station communication business, Internet information services, etc. as the main business of the enterprise, small, relatively fixed partners, so once heard that there are several subsidiaries under the name, immediately aroused alarm.
By consulting the national enterprise credit information disclosure system and the platform such as sky-eye search, CNOOC Information Technology (Beijing) Co., Ltd. found that things are far more serious than imagined – the 8 companies registered under its name, has each carried out a number of investment business, “son begets grandson” “Sun begets son”, associated with each other, constantly extended, the most even combed out more than 120 enterprises. In the industrial and commercial information, these “grandchildren” are all under the name of “China National Offshore Oil Group”, and have become the so-called “subordinate enterprises of central enterprises”.
CNOOC Information Technology (Beijing) Co., Ltd. immediately reported to the police, and at the same Time reported to the market supervision department where the 8 false affiliated companies were registered, and applied for equity freeze for the 8 false affiliated companies. On the advice of CNOOC’s legal department, the company issued a statement to publish the names and industrial and commercial information of each of the eight false affiliated companies to avoid further impact and loss.
At that time, an enterprise was planning to buy one of the companies and had just finished the deposit payment. Seeing the statement, it quickly called the police and recovered the loss in time. According to the price negotiated with the agency, the transaction will cost a total of 7 million yuan, of which 3 million yuan is the enterprise transfer costs, 4 million yuan is said to be given to its “affiliated central enterprises”, that is, CNOOC Information Technology (Beijing) Co. Obviously, this is just a front.
After the statement was issued, in addition to Oriental Galaxy Holdings Co., another company, Fujian Xin Qisheng Technology Development Co. Ltd. is also a wholly-owned subsidiary of Beijing PetroChina Technology Development Company, which is also “under” the name of CNPC, according to the information in the sky-eye search.
In recent years, many “pseudo-central enterprises” have emerged in the capital market, under the banner of central enterprises, relying on the credit backing of the central enterprises to gain the trust of financial institutions and raise funds in a big way. Once there is a default, the real central enterprises behind immediately come forward to clarify or cut, financial institutions and investors suffered heavy losses.
In 2015~2016, under the banner of “central enterprise shareholders” and “tens of billions of registered capital”, Zongxin Wealth Asset Management (Tianjin) Co. “In December 2016, the Tianjin Binhai New Area Public Security Bureau opened an investigation into the suspected illegal absorption of public deposits.
Two months later, one of its externally proclaimed “central enterprise shareholders”, Ruibao Dingsheng Asset Management Co., Ltd. took the Tianjin Free Trade Zone Market and Quality Supervision Administration to court in an industrial and commercial administrative registration dispute, claiming that it had been registered as a subsidiary without its knowledge, but the registration department insisted that all procedures were legal and compliant, and since Zongxin Fortune The lawsuit was dismissed by the court due to the fact that the illegal fund raising case had not been closed.
Ironically, Ruibao Dingsheng Asset Management Co., Ltd. is not a true central enterprise, one of its controlling shareholders is China Ruibao International Cooperation Co. “. The latest information shows that the enterprise has been listed as a company in breach of trust by the Supreme Court.
It is not only ordinary investors who are “flashed” by the aura of “central enterprises”, but also “pseudo-central enterprises” that are trading as central enterprises in the capital market where information disclosure is more perfect.
On July 12, 2018, the listed company RongYu Group announced that in order to promote further cooperation in the field of electrical equipment and industry chain extension, the company signed a “Strategic Cooperation Agreement” with CNNC Investment Group, in which CNNC will increase its shareholding in the company and become a strategic investor. After the equity investment, its shareholding in the company will not be higher than 5%.
According to the agreement, the two sides intend to jointly build a fund investment platform with a total scale of RMB 5 billion to RMB 10 billion within three years, and at the same time adopt various ways of in-depth cooperation to invest in high-quality projects related to the industrial chain of both sides, such as electrical equipment and engineering construction, to create a “central-ministry innovation cooperation platform”. In addition, RongYu Group intends to increase its shareholding to CNNC or its affiliated companies, and use each other’s qualification and resources to focus on developing engineering projects in countries along the “Belt and Road”.
However, the day after the announcement, the Shenzhen Stock Exchange issued a letter of concern, asking about the “identity” of CNNC, but RongYu Group replied that it “could not confirm the property rights and control relationship of CNNC, and therefore could not confirm whether there is an affiliation with the central enterprise”. This “cooperation between the central government and the people” ended with the “pseudo-central enterprises” being exposed and the agreement terminated.
Who gave the “pseudo-central enterprise” a bluff identity?
Under the strict due diligence and information disclosure by financial institutions and the capital market, why did the “pseudo-central enterprises” still manage to thrive? Who gave the “pseudo-central enterprises” their bluff status?
According to Liu Junhai, director of the Institute of Commercial Law of Renmin University of China, the reason why “pseudo-central enterprises” are so confusing and difficult to detect is that, on the one hand, many central enterprises have a complex hierarchical structure, and there are loopholes in the supervision of foreign investments of subsidiaries by their parent companies; on the other hand, the information on foreign investments of central enterprises is not transparent, and even when they encounter “pseudo-central enterprises”, they are not transparent. On the other hand, the information on foreign investment of central enterprises is not transparent, so even if we encounter “pseudo-central enterprises”, there is nowhere to check.
In the interactive communication section of the SASAC website, it is often difficult to get an affirmative or negative answer to an inquiry about the definition of an enterprise’s affiliation, which shows the proliferation of “pseudo-central enterprises” and the difficulty of identifying them.
Generally speaking, central enterprises in a broad sense are divided into three categories, one is the enterprises managed by the State-owned Assets Supervision and Administration Commission of the State Council, according to the latest list of central enterprises, a total of 97. Secondly, they are enterprises managed by the CBRC, CIRC and SFC, which belong to the financial sector, such as the five major state-owned banks and the Export-Import Bank of China, the Agricultural Development Bank of China and the China Development Bank. Third, enterprises managed by other departments of the State Council or mass organizations, belonging to tobacco, Gold, railroad passenger and freight, ports, airports, radio, television, Culture, publishing and other industries.
From the current case, often be attached, are subsidiaries of central enterprises, the more layers, the less likely to be found. Previously, the hybrid reform of the subsidiaries of central enterprises needed to be approved by SASAC, and in June 2019, SASAC delegated the approval of the hybrid reform of subsidiaries to central enterprises. This means that if the equity information is true, the head office level must be aware of it.
“If a subsidiary of a central enterprise is indeed involved in this business, then this equity change is real, and whether it has been authorized by the parent company is another issue.” A market regulator in charge of business registration told China Newsweek that in a change of equity, both sides of the transaction need to provide the registration department with application forms, equity transfer agreements, shareholders’ meeting resolutions and other materials, and the business registration department also has to verify with both sides of the investment. “Unless the materials provided are false to be defined as false registration, but that is illegal, no one in the registration department dares to do this and cannot do it.”
According to the market regulator, these companies are true central enterprises in the legal sense, in terms of their shareholding structure. However, China Newsweek found that in some equity changes, the central enterprises’ contributions are all pledged and not paid up, and the paid-up period is mostly decades later.
“As a first-tier subsidiary of the group, foreign investment must go through the group’s level-by-level approval.” A staff member of CNOOC Information Technology (Beijing) Co., Ltd. told China Newsweek that in the course of forensics, the legal department retrieved copies of several companies for filing, “and the format of the company’s business license is completely different, a slight comparison can be seen as a forgery.”
In a statement, CNOOC Information Technology (Beijing) Co., Ltd. said, “After internal verification by the Company, all registration materials including shareholders’ resolutions, articles of association, equity transfer agreements, the Company’s business license, seals and signatures of legal representatives used in the false registration of the aforementioned eight wholly-owned subsidiaries were forged.” At present, the police have intervened in the investigation, and it is believed that the truth about these 8 “pseudo-central enterprises” will be found out soon.
In addition to the direct investment of the central enterprises, between the fake central enterprises and the real central enterprises, a central enterprises affiliation industry chain is hidden. In the network, the search for state-owned enterprises, can search for a lot of information, “China News Weekly” to the name of the enterprise to find the central enterprises to rely on the reason, contacted an investment consulting company in Beijing, before explaining the intention, the other party is very frankly answer, “is to rely on the mixed reform it.”
According to this intermediary, the hybrid is not complicated, the key depends on how many levels of subsidiaries to hang under the name. If the company is hanging 2 level subsidiary, the company is 3 level, if hanging 3 level, the company is 4 level. In addition, it also depends on the affiliated SOEs or central enterprises, the price ranges from 1.6 million to 10 million. Among them, the price of affiliated state-owned enterprises 3 subsidiaries is 1.6 million yuan a year, affiliated with the central enterprises basically in more than 4.5 million yuan, the second year if you continue to affiliate, according to the market price again.
According to the process, after determining the dependent enterprise, the intermediary will be the other enterprise’s responsible person out face-to-face communication, and then the two sides signed a shareholding agreement, transfer money to the other person in charge, and then the other party in the form of rebates to the intermediary. “The affiliated state-owned enterprises do not participate in the operation and dividends, but only to change the corporate shareholders, equivalent to their acquisition of your business, all the processes completed, about a week.”
China Newsweek” combed through a number of “pseudo-central enterprises” found that few enterprises are affiliated with a central enterprise shareholder name for more than a year, so many “pseudo-central enterprises” business information on the change of investors is extremely frequent. Moreover, it seems that affiliation with a central enterprise can be “addictive”, some “pseudo-central enterprises” in charge of a number of enterprises under the name, are listed under the “Chinese head”, or even several enterprises under the name of mutual affiliation.
The latter claims to be a “State-owned enterprise under the supervision of the State-owned Assets Supervision and Administration Commission of the State Council” on its official website, and the group has nearly 20 wholly owned and controlled subsidiaries.
CSCF is an enterprise established in 2013, from June 2017, began to invest in the name of the “Chinese head”, to May 2020, according to the frequency of a year, the replacement of four suspected “central enterprises” “In February 2021, with the investment of Oriental Galaxy, it was transferred to the CNOOC system, and a few days later, with the change of Oriental Galaxy’s investors, CSCF was also labeled as CNPC.
It is worth noting that, before the Oriental Galaxy, CSCF relies on several “Chinese” are not real central enterprises, which is another form of “pseudo-central enterprises” – nuclear name. Article 10 of the “Measures for the Implementation of Enterprise Name Registration Management” stipulates that, except for enterprises established by decision of the State Council, the name of an enterprise shall not be entitled “China”, “China”, “national” “national”, “international” and other words. Article 9 of the “Regulations on the Registration of Enterprise Names” stipulates that enterprise names shall not contain content or words that may cause deception or misunderstanding to the public.
This has given rise to another service of intermediaries, business registration verification of names. The introduction of the aforementioned intermediary company includes solving difficult name verification, such as national, Chinese, and no region. These “Chinese character” enterprises, although in the equity relationship with the central enterprises have nothing to do with, but by virtue of the “Chinese character” name, but also repeatedly portrayed the central enterprises. The aforementioned CNNC Guo Cai Investment Group, which has successfully built a “central-ministry innovation cooperation platform” with Rongjue Group, is one of these “pseudo-central enterprises”.
Repeatedly banned
To solve the problem of “pseudo-central enterprises”, the first thing is to sort out the background of central enterprises. 2016, the State-owned Assets Supervision and Administration Commission (SASAC) launched an operation to clean up zombie enterprises, and according to SASAC data, as of the end of 2019, 2,041 sub-companies included in the scope of work of “dealing with rigid and difficult situations” have achieved operating losses. According to SASAC data, by the end of 2019, 2,041 subsidiaries included in the scope of the “treatment and cure of zombie enterprises” had turned around their operations, nearly 700 enterprises in distress had been cleared from the market, the management level of all central enterprises had been controlled to within 5 levels (including 5 levels), and the total number of legal persons had been reduced by over 30%.
In December 2019, at the meeting of the heads of central enterprises, SASAC once again proposed to clean up “two non-two capital”, as well as “clean up ‘fake central enterprises’ that are not funded or controlled but bear the name of central enterprises, and clean up enterprises that have been in liquidation for many years and are not included in the consolidation. The “two non-corporate enterprises” and “the ‘fake central enterprises’ which are not funded or controlled but are named as central enterprises, and the enterprises which are in liquidation and not included in the scope of consolidated statement for many years.
The main body of the “counterfeit” is naturally the central enterprises themselves. Recently, China National Offshore Oil, China Chengtong, China Chemical Engineering, China Iron and Steel, China Petroleum and other related central enterprises have issued statements to explain the situation of being impersonated and falsely affiliated. However, after the appearance of the counterfeit statement, it seems to have little impact on the enterprises, changing shareholders, and the business behavior is not much affected.
“The cost of breaking the law is too low, and the cost of defending rights is too high.” The aforementioned CNOOC staff said to “China Newsweek”, to prove that the other party false registration, you must do a judicial Appraisal, and can only identify the authenticity of the official seal and signature, can not identify the business license, unless you get the original of the other party registration, “originally is false registration, where is the original?”
“In the process of cleaning up ‘pseudo-central enterprises’, the relevant departments did not form a joint effort and failed to take effective disciplinary measures.” Liu Junhai further explained to China Newsweek, first of all, the combined efforts of the state-owned assets regulatory departments, including SASAC and the Ministry of Finance, currently adopt a multi-headed supervision model for central enterprises, with blind spots and loopholes in supervision. At the same time, the state capital regulatory department and the market registration department to form a 24-hour, 360-degree, cross-market, cross-regional, cross-sector, cross-industry, information sharing, fast and efficient, seamless, organic and resonant regulatory cooperation mechanism of state-owned enterprises, especially the central enterprises. In addition, financial regulators and public security organs should also be included in this collaborative and common governance platform.
While forming a synergy, it is also necessary to improve the transparency of information of central enterprises. “Information asymmetry is related to the limitations of the state capital regulatory capacity, but also with the weak control of the entire group of central enterprises, the next step must be to make up this short board.” Liu Junhai said, one is to supervise the front, the second is to improve transparency. In the future, any central enterprises to set up subsidiaries, grandchildren, should be registered in accordance with the provisions of the company law and the articles of association and public disclosure. “The Family tree of the central SOEs should be drawn out in a hurry and revealed to the world.”
In Liu Junhai’s view, the reason why central enterprises are frequently “porcelain”, ultimately lies in the credit and resource advantages behind the central enterprises, affiliated with the central enterprises can quickly obtain the policy and financing facilities, especially in the “pseudo-central enterprises” the hardest hit –Construction and finance industry, resources are indeed tilted to state-owned enterprises, especially the central enterprises, the subject amount is large, the impact is wide, once the problem, will bring huge risks. Even if the central enterprises immediately cut, the credit of the central enterprises has also caused damage.
“So to get to the root of the problem of ‘pseudo-central enterprises’, we must crack this state of inequality between state-owned enterprises and private enterprises, to achieve equal status, common development, fair competition, mutually beneficial cooperation, equal supervision and equal protection. Neither the state into the people, nor the people into the state retreat, so that state-owned enterprises, private enterprises enjoy the same access to the market.” Liu Junhai said, in addition, from the corporate law level, but also to improve the company registration system, including company registration, company registration of changes and company cancellation registration, to break the “pseudo-central enterprises” difficult to be liquidated spell.
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