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Reverse Mergers And China Companies: Caution Is The Key by Md Noor Rayhan
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Reverse Mergers And China Companies: Caution Is The Key |
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Marketing,Investment
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From this article, it might be clear to all about reverse mergers for china based companies, SEC action, the problem of this system, and steps for saving investments of people including the influence of the terms in public sectors in China. Lets it describes what is Reverse Mergers? Suppose “A” is a public company and “B” is a private consultancy firm. Then, “A” shares their stock (stock like a share business) to “B”. In addition, “A” charge additional interest ( that’s called extra profit) against “B”. This phenomenon can be described as reverse mergers. “A” might be compared as shell firm. When the phenomenon happens, then are seen some problems. The main problem is the failure of stock market value. From the definition, it is clear that private firm can be converted into public firm and vice versa. But in the mean time, when stock markets value upright quickly, it is very difficult to maintain market volatility for shell owners. Because stock holders ask their liquid ( money) and tempted when they can’t. Then condition turn into out of control for big companies. Actually now this day in China, reverse mergers are becoming popular. Before, a system was available named IPO ( initial public offering). In this system, the only public company can handle their deal. But reverse mergers represent the alternative solution. Very fast solution including less expensive, this is the main aspects of this system. A statics show that from 2007 to 2010, 159 companies in China have involved reverse mergers. But in the same periods only 56 companies follow their traditional IPO system. Securities and Exchange Commission ( SEC) taken the normal and technical steps against China Reverse Mergers (CRM). Actually the investigation runs for several public companies. According to SEC list, China Skye One Medical, Fuqi International, Rino International, China green agriculture, China Century Dragon and some others are reported. The subject matters of action are like as an investor ( who invest in these companies), the rules and regulation of firms ( that’s meant the principle), the shareholders ( who leads promoting), bankers ( maintain the calculations money). The Public Company Accounting Oversight Board ( PCAOB) has also highlighted their view in the CRM. Because of being illegal of company head, it is closed. These are the reasons for taking steps against CRM. Although the system has some benefits specially for small capital shareholders, they are afraid sometimes to invest their money in china. Everybody knows there are a lot of risk in CRM. But the inflation and illegal approach of the leader persons, investors lost their interest to invest. The investor should consider some criteria to save their investment. Such as cope with a market value loss. It is the main step for the investors of china. A misdeed is enough for ruining themselves. Then the lawsuit by civilians is come. It refers instant money settlement policy. Then charges of criminals, the rapidly increasing rates of stocks, the fluent changes of chain of command or managing authority, the market volatile. It is hoped that after considering those phenomena, they can protect themselves from destroying. Despite of forcing strict law, the marketplace lost their volatile condition. But it is not fair. It should be solved. So CRM should take those criteria for maintaining their policy. • There should be available investment law. Fix the share value of a pattern or ensure the original cost of the share. The internal investigation or publishing regular updates of CRM. • If there are seen a bad frame against a company, as soon as possible to take proper steps against the head. The investigative company ruled overs the situation. If they find any doubts of CRM, it is better to take extra time what will go next. It is mandatory to stop the business of this company. • If the investigation syndicate fails to maintain the situation, then it is suggested to take help from the government agents. In before, it is recommended to select experienced authority for maintenance the CRM. Then it is said hopefully that investors can protect their investment as well as they invest more capital in the market of CRM. Actually it is well known every situation has both fair and bad conditions. Same as CRM. But one thing is said in brief, caution is the key in china. It is strongly desired the fair condition in CRM.
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Reverse Mergers, Caution,
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