McDonald's and KFC are very popular in China. Chinese food chains have always been indignant, and people keep jumping out to challenge foreign fast food. The "real kung fu" that appeared more than ten years ago seems to be really a little kung fu. In just a few years, there are more and more chain stores. Like the name of the company, "Real Kung Fu" broke out after it achieved certain achievements and status in the investment and entrepreneurial circles, which was quite sensational.
First, the real kung fu is infighting, full of twists and turns
In 1991, Cai Dabiao's brother-in-law Pan Yuhai founded the-168 dessert house in Dongguan, but at this time, Cai Dabiao and his wife Pan Minfeng's hardware store was struggling.
In 1994, Pan Cai and his wife each invested 41,111 yuan to open a new restaurant named 168 Steamed Food Restaurant in Dongguan, which is the predecessor of real Kung Fu. The new restaurant Pan Yuhai holds 51% of the shares, while Cai Dabiao and his wife Pan Minfeng each hold 25%. Pan Yuhai is in charge of the early stage of the restaurant. Pan Minfeng is mainly responsible for the cashier work, while Cai Dabiao is responsible for the reception.
In 1997, due to Pan Yuhai's excellent cooking skills and the introduction of computer-controlled integrated steamer, the business of 168 steamed products was booming. Because 168 is a number when registering a trademark, they registered a double-seed catering company and registered the trademark of "Double Seed". The ownership structure of the enterprise remains unchanged.
In 2113, Cai Dabiao proposed to Pan Yuhai that he wanted to be the president of the company (Pan had been the president before), and proposed to change his post once every five years. Pan Yuhai promised Cai Dabiao to be the next president, and as a vice president, he undertook the development of stores all over the country.
in 2114, Cai Dabiao re-planned its brand and invited Ye Maozhong to change "Double Seeds" into "Real Kung Fu". In order to control the enterprise, Cai Dabiao arranged for his relatives to enter the management and supply chain of Kungfu. The younger brother Cai Liangbiao monopolized the computer supply of real Kung Fu, and the older sister Cai Chunmei mastered the procurement business of real Kung Fu. Li Yueyi, the elder brother-in-law, monopolized the specialty and kitchenware of stores all over the country, while Wang Zhibin, the younger brother-in-law, monopolized the poultry supply of Kung Fu. Kungfu has gradually become a family-owned enterprise of Cai's family.
In September 2116, Cai Dabiao was outsourcing mistresses, and Pan Minfeng finally agreed to divorce Cai Dabiao (not made public) and exchanged his 25% controlling stake for custody of his son. Therefore, Cai Dabiao and Pan Yuhai each hold 51% of the shares.
At the end of 2117, Real Kung Fu introduced two venture capitalists, Zhongshan Linkage and Today Investment, and gradually implemented de-familyization; Among them, there are 5 shareholders: Cai Dabiao and Pan Yuhai each accounting for 41.74%, Zhongshan Linkage and Today Investment each accounting for 3%, and Double Seed Company accounting for 11.52%. ***5 seats on the board of directors, consisting of Cai Dabiao, Pan Yuhai, Pan Minfeng, and 1 directors from Zhongshan Linkage and Today Investment.
In 2118, Cai Dabiao's term of office will soon expire. Pan Yuhai was not willing to be only a shareholder, so he founded a new brand "Ha Master" in early 2118, mainly engaged in beef noodles. In this way, Cai Dabiao is in charge of real kung fu, and Pan Yuhai is in charge of Master Ha.
In early 2119, Cai Dabiao refused to invest more than 34 million yuan in Master Ha. Kungfu successfully applied to the bank for an unsecured loan of RMB 1 billion in that year. In order to ruin the loan, Pan Yuhai immediately told the bank that there were contradictions among shareholders and the loan was risky. At this point, the two major shareholders broke completely.
In March 2119, Cai Dabiao's extramarital affair was exposed and he had an illegitimate child. Pan Minfeng immediately sued Cai Dabiao for bigamy and wanted to get back 25% of the equity.
In August 2119, Pan Yuhai appointed his brother Pan Guoliang as the deputy general manager of Kungfu as the major shareholder. As a result, Cai Dabiao turned him down, and conflicts broke out between the two sides. In addition, Pan Yuhai's request to check the financial accounts of Kungfu was also rejected, and Pan Yuhai immediately sued Kungfu.
in February, 2111, the court ruled that real kung fu refused to audit the accounts of major shareholders, and asked them to submit the accounting information to an accounting firm for audit.
In 2111, Pan Yuhai falsely said that he would sell his shares and let Cai Dabiao take absolute control. Cai quickly borrowed 37.6 million yuan from the bank, and another 36 million yuan from Real Kung Fu Company, and paid more than 71 million yuan to Pan Yuhai to buy its shares in Real Kung Fu. After the money was paid, Pan Yuhai did not deliver the shares.
On March 7th, 2111, some senior executives of Kungfu were taken away by the police to assist in the investigation on suspicion of economic crimes. Cai Dabiao and his sister Cai Chunmei immediately disappeared. On the day Cai Dabiao left, he appointed his little sister Cai Chunhong as the chairman. However, Pan Yuhai refused to recognize this appointment, and the dispute over control between the two parties has since entered a white-hot state.
In 2114, the court found that Cai Dabiao had embezzled or misappropriated more than RMB 31 million from Kungfu Company from 2119 to 2111, which constituted the crime of duty embezzlement and the crime of misappropriation of funds respectively.
In 2115, Cai Dabiao was sentenced to 2114 years' imprisonment for the crimes of duty embezzlement and misappropriation of funds. With the final judgment of the case coming into effect, Cai Dabiao's real Kung Fu equity has entered the judicial auction procedure, and it is rumored that the equity valuation is as high as 2.5 billion yuan.
First, the impact caused by infighting
1. The IPO was blocked and delayed
Kungfu originally planned to list Fuji Food on the backdoor of Hong Kong stocks, but under frequent infighting, Pan Yuhai and Cai Chunhong both said that the listing plan would be postponed; It is unlikely that the real Kung Fu family infighting will be effectively solved in a short time, and the IPO process of real Kung Fu will be postponed indefinitely.
2. The project ran aground, and venture capital stopped
According to relevant data, Pan Yuhai forcibly blocked the keyhole of the safe where the company's official seal was stored in the competition for the control of Kungfu, which made it impossible to seal the contract and company documents, so Kungfu was forced to abandon the bidding for Fuzhou Airport, the entry of Wanda in Xiamen Huli and other important market expansion projects. In addition, infighting also made PE institutions lose confidence in real kung fu investment.
3. Brand reputation plummets
A person from Guangdong Catering Service Industry Association believes that the constant exposure of local chains in supply and management will inevitably undermine consumers' confidence in the real Kung Fu brand. According to the online survey, some netizens said that they would not buy real Kung Fu food again, and some netizens thought that the infighting between the two major shareholders would make real Kung Fu "rapidly decline" and "possibly close down".
4. Loss of management, serious decline in the company's performance
When Cai Dabiao's criminal case was not pronounced, the company's management was seriously lost, and most of the executives who won the company's options had left their jobs. The real Kung Fu civil strife has affected the company's operation, and the company's net profit plummeted two months after Cai Dabiao's accident.
1. Problems in the internal control of Kungfu
1. Unreasonable shareholding structure of Kungfu
Pan Cai and his wife each hold 51% of the shares, which can be described as a serious injury to the enterprise from the management and decision-making point of view. A close shareholding structure can easily cause disputes among shareholders. Once there are differences of interests among shareholders, the lack of shareholding structure of the controlling shareholder greatly increases the difficulty of negotiations.
2. The effectiveness of the cooperation agreement is unreasonable
The Cooperation Framework Agreement stipulates that the general manager candidate and the deputy general manager shall be appointed by Cai Dabiao and Pan Guoliang respectively, and its Articles of Association has made it clear that the appointment and removal of senior management must be voted and approved by the board of directors. If the judgment is based solely on the Company Law, the agreement is not in conformity with the procedure. It shows that the original system design was not thoughtful, which caused conflicts between the agreement between shareholders and the company's articles of association, and buried hidden dangers for a series of contradictions now.
3. The articles of association of the company are illegal
According to the articles of association of Kungfu, the management organization is headed by a general manager who is nominated by Cai Dabiao. This article gives the chairman too much power, and the nomination of the general manager should be decided by the board of directors according to the principle of equality and mutual benefit.
4. Disadvantages of family governance mode
There is no effective firewall between enterprises. Individuals directly hold shares, among which Cai Dabiao and Pan Yuhai have three directors and one supervisor. The war of family conflicts burned the board of directors, and enterprises could not make decisions. Foreign capital was dumbfounded and became the object of both sides of the struggle. Defects such as cronyism when an enterprise grows up greatly affect its development. In real kung fu, companies tend to be humanized rather than professional in management.
before the introduction of venture capital in 2117, Kungfu adopted a "family governance model" and has been operating with its own funds. After introducing the scientific thinking mode of Hong Rengang, a gold medal trainer in enterprise modernization management in 2111, he was too eager for success, and it was thoughtless to adopt such a "de-familyization" way to improve before dealing with the interests of family members.
5. Irrationality and limitation of human resource management
The IT business of Kungfu has always been monopolized by Cai Dabiao's younger brother, while his younger sister is in charge of overall procurement, and his younger brother-in-law gradually monopolized the poultry business. In 2114, he forcibly introduced his older brother-in-law to become the preparatory supplier of the company. Most family members hold very important positions in the enterprise, so it is difficult for employees outside the family to exert their talents and inject fresh blood and ideas into the enterprise. Because family members are often treated differently, it is unreasonable for non-family employees to feel frustrated and lose their sense of belonging. This identity as a family member weakens the role of performance management, and it is difficult to effectively motivate business managers who are not family members.
6. The supervision mechanism didn't work
On the surface, the governance structure of Kungfu has a board of directors and a board of supervisors; But in fact, the shares of Kungfu are highly concentrated, the responsibilities among directors are unclear, and the ultra vires behavior is serious.
iv. impact of ownership structure design on corporate governance
(I) control risk reflected by ownership structure
if there is only one shareholder, a one-person limited liability company can be established, with 1111% ownership.
if two or more shareholders set up a limited liability company together, the shareholding ratio of two shareholders should avoid 51%: 51%.
three-person shareholding should try to avoid 33%: 33%: 34%. For a company with more than 2 shareholders, if one of the shareholders wants to enjoy absolute control over the company, then its shareholding ratio needs to exceed 2/3.
suppose the company has four shareholders, and the shareholding ratio is 51%: 41%: 5%: 5%, respectively. Two 5% shareholders will be wooed by 51% and 41% shareholders, which is not conducive to the stability of the company's decision-making power.
in addition, according to article 43 and paragraph 2 of article 113 of the company law of the people's Republic of China, the resolutions of the shareholders' meeting or the shareholders' general meeting to amend the articles of association, increase or decrease the registered capital, and the resolutions of the company's merger, division, dissolution or change of corporate form must be passed by two-thirds of the shareholders representing more than two-thirds of the voting rights or the shareholders present at the meeting. If the shareholder holding 41% of the shares is an investor, once his decision is inconsistent with that of the entrepreneur, the entrepreneur may not be able to promote the company's major decisions because the investor's equity accounts for more than 1/3. However, if the ratio of 51%: 15%: 15%: 11%: 11% is chosen, the founder shareholder of the company is dominant, and the proportion of shares of investors and other shareholders is relatively small, which is conducive to the stability of decision-making power.
There are several key points in the equity of an enterprise:
67%-complete control
51%-relative control
34%-one-vote veto
11%-over 11% of the voting rights can apply for the right to convene an interim meeting (the company can be dissolved)
5%-major shareholders. You can also show the control at the equity level in the following ways:
1. Voting entrustment/concerted action agreement
2. GP dominance of limited partnership enterprises (that is, the voting right belongs to the general partner)
3. A/B share system
Due to the limitation of space, if interested readers can leave a message, our WeChat official account will continue to study and explain it later.
(II) Ownership structure and corporate governance
Ownership structure is the basis of corporate governance mechanism, which determines the shareholder structure, the degree of equity concentration, the status of major shareholders, and the way and effect of shareholders exercising their power, and then has a greater impact on the formation, operation and performance of corporate governance model.
Based on the unreasonable internal ownership structure of the family business, this paper puts forward the following suggestions:
(1) Perfecting the Articles of Association
The company is a series of contracts, all of which should be clearly written. If there are any supplements, the articles of association can also be modified so that there are rules to follow when contradictions arise. Good family business governance must establish a very clear family governance structure, and make it clear and fixed in the form of very formal organizations and rules such as family charter or family parliament.
(2) Improve the internal legal system of the company
Members of the board of directors should know the legal contents related to the listing of the company. If entrepreneurs have the concept of legal health preservation at the beginning of their business, and have good legal literacy and awareness of rules, then many legal problems can be avoided in the process of enterprise development. Combined with the struggle and feud between Pan Cai and his family, if Cai Dabiao had enough knowledge of the legal consequences of bigamy, and if Pan Cai and his family knew better that the company had an independent personality rather than a plaything in the hands of shareholders, perhaps the real kung fu would not be so painful.
(3) Establish a good internal control system and process of the company
Directors, senior managers and other personnel must set an example. The system established during the company's transformation period should avoid "personal tyranny", and the transformation goal is to turn to diversification and socialization of enterprise property rights on the basis of protecting shareholders' interests, and treat all employees equally:
1) Financial aspects: strengthen job separation and establish clear approval authority; The approval of the company's payment process and payment application cannot be unified by the company's so-called "powerful people", and all departments should be clearly divided and supervise each other;
2) Regularly check the staffing and post setting in the collection process, and regularly check the examination and approval system to prevent managers from directly contacting cash flow.
2. Strengthen the supervision power of independent directors.
Control the monopoly by adding the system of independent directors. In addition, there are some special committees under the board of directors to ensure the scientific decision-making of the board of directors.
3. Hiring a professional manager
Family members should be clear about their role in the enterprise. The needs of the company are different at different stages. Once the founder can't keep up with the needs of the company, he should take the initiative to quit. Hiring professional managers can reduce the problem of cronyism and leapfrog management to a certain extent.
Different ownership structures will produce different governance structures. Only by reasonably optimizing the ownership structure can the corporate governance structure be more perfect. Generally speaking, what kind of ownership structure there is must have its corresponding corporate governance mechanism; However, from the perspective of social resource allocation, what kind of ownership structure can best play a positive role in corporate governance is an important topic worthy of further study.