Recently, Landocean Energy Services Co.Ltd(300157) received 6 letters of clearance from the exchange due to disputes between the board of directors. During the period, the proposed removal of directors, unlocking and taking seals, mutual accusations in the announcement and other dramas were staged one after another, and the shareholders shouted “can’t see it”.
From the perspective of the power structure of the board of directors, Landocean Energy Services Co.Ltd(300157) after the new controlling shareholder came to power, the board of directors preferred the mode of joint governance. The new controlling shareholder, the original controlling shareholder and the management nominated some directors respectively to form a relatively balanced board structure.
With the split of the board of directors, it also means that at least one party has broken some kind of tacit understanding originally formed by the parties. According to Landocean Energy Services Co.Ltd(300157) announcement, the root cause of the company’s contradiction is related to the failure to implement the solution to the debt problem as agreed.
In fact, in the capital market, infighting caused by a party’s failure to fulfill its commitments is not uncommon. Although the business ethics standard of “benevolence, righteousness, courtesy, wisdom and faith” has lasted for thousands of years in China, the famous economist Wu Xiaoqiu also said that the spirit of contract is the soul of the development of capital market. However, at present, the loss of contract spirit is common in the commercial society, which needs to be paid attention to urgently.
In the capital market, if shareholders violate the contract and lose trust, it will not only affect the operation stability of the company, but also affect the confidence of regulators and investors in the company. If investors lose confidence in the company, it will also have an adverse impact on the company’s share price and future development.
Landocean Energy Services Co.Ltd(300157) ‘s infighting farce is not the first and will not be the last one in the capital market. The author believes that this event, as a “negative teaching material”, once again shows the dilemma caused by the lack of contract spirit under the framework of joint governance. In this regard, the author puts forward the following three suggestions.
First of all, all parties should form a consensus to focus on the enterprise development itself. The classic assertion of the business world that enterprises should create value for shareholders is still valid today. This also means that if the dispute between shareholders affects the operation of the company, the final consequences should be borne by shareholders. In the past, real Kung Fu lost its IPO due to internal fighting, which is one of the footnotes of the company’s internal fighting. On the contrary, “harmony generates wealth”. If shareholders of all parties can give full play to their respective advantages, make great efforts to one place and focus on solving difficult and miscellaneous problems in the development of the enterprise, a win-win situation will be achieved.
Secondly, all parties should not only put their positions right, but also live together on an equal footing. All parties should have a clear understanding of their role and ability in the company, put their position right, and let capable people lead the development of the company. However, we should also see that equality is the due meaning of the spirit of contract and one of the basic principles of coexistence between the two sides. When equal coexistence becomes empty talk, it may lead to the stronger party tearing up the contract, violently seizing power, and making it difficult to bridge the differences.
Finally, we should prevent conflicts of interest at the institutional level. The purpose of shareholders’ infighting is nothing more than for their own rights and interests. In the face of power, brothers who “fight the world” together can also turn against each other. Therefore, it is not the best policy for modern corporate governance to rely on moral constraints. The company needs to establish a set of rules to solve the conflict of shareholders’ interests in the system, and “there are laws to follow” in case of contradiction.
It is worth mentioning that in this Landocean Energy Services Co.Ltd(300157) incident, the independent directors did not play the role of coordinating the contradictions of shareholders, but became the vanguard of the struggle behind shareholders. The author believes that independent directors should be independent and help solve the internal conflict among shareholders at the level of the board of directors, rather than being willing to be a “chess piece” and become a bargaining chip between opposing shareholders. Independent directors need to be clear that what they represent should be the interests of small and medium-sized investors.
