Governance of Law on "Cliquy-Enterprise"

Under the operating pattern of "cliquy-enterprise", the assets of a listed company can be transferred to non-listed companies controlled by such a listed company by its controlling shareholder, through equity investment, transfer, and other covert operations in internal capital market, resulting in a downturn in performance of the listed company and a serious infringement to the interests of its medium and small investors and creditors. The paper summaries the general features and operating patterns of "cliquey enterprise", points out the gaps in of the current laws, and proposes the regulatory and administrative system to establish and improve investment and financing process, the firewall system in stock market, as well as enhanced obligation system for controlling shareholder in "cliquey enterprise", by adopting research approaches such as empirical research and case analysis.