After the transfer of 15% of the shares, Gree Company will have no controlling shareholder or actual controller?

After the share transfer is completed, some industry insiders analyzed that Gree Electric's "no controlling shareholder, no actual controller" structure will help Dong Mingzhu and other Gree Electric executives to further strengthen their voice in Gree Electric.

Gree Electric Appliances announced that the controlling shareholder of the company, Gree Group, and Zhuhai Mingjun Investment Partnership (Limited Partnership) (hereinafter referred to as Zhuhai Mingjun) signed a "Share Transfer Agreement", stipulating that Zhuhai Mingjun will acquire 902 million shares of Gree Electric Appliances held by Gree Group (accounting for 15% of the total share capital of Gree Electric Appliances) at a price of 46.17 yuan per share, with a total transfer price of 41.662 billion yuan. The state-owned equity transfer of Gree Electric Appliances, which lasted for nearly 8 months, has finally come to an end.

Since Gree Electric Appliances announced in April this year that Gree Group intends to transfer 15% of the total share capital of Gree Electric Appliances held by Gree Group through an agreement by publicly soliciting transferees, the transfer of Gree Electric Appliances' equity has become the focus of market attention.

On October 28, Gree Electric Appliances issued the "Announcement on the Results of the Public Solicitation of Transferees for the Proposed Agreement Transfer of Part of the Company's Shares by the Controlling Shareholder", officially announcing that Zhuhai Mingjun became the transferee of 15% of Gree Electric Appliances' equity.

According to the previous announcement, Zhuhai Mingjun should sign a "Share Transfer Agreement" with Gree Group within 10 working days from the date of being determined as the final transferee, and pay 40% of the total transaction price as a performance guarantee within 5 working days from the date of signing the "Share Transfer Agreement".

However, on November 11, Gree Group notified Gree Electric Appliances that, in view of the unfinished content of the share transfer agreement, Zhuhai Mingjun and Gree Group were still negotiating, and both parties agreed to postpone the planned signing date of the share transfer agreement. With the signing of the share transfer agreement between Gree Group and Zhuhai Mingjun, the mixed ownership reform of Gree Electric Appliances is about to be officially concluded.

Different from the previous description of "Gree Electric's controlling shareholder changes hands" by the outside world, Gree Electric clearly stated in yesterday's announcement that "the transferee has no actual controller. According to the equity structure and corporate governance of the listed company after the completion of this share transfer, the listed company will change to have no controlling shareholder and actual controller after the completion of this share transfer."

Before this share transfer, Gree Electric's controlling shareholder was Gree Group, and its actual controller was the State-owned Assets Supervision and Administration Commission of Zhuhai Municipal People's Government. After the share transfer was completed, industry insiders analyzed that Gree Electric's "no controlling shareholder, no actual controller" structure will help Dong Mingzhu and other Gree Electric executives further strengthen their voice in Gree Electric.

It is understood that the no-actual-controller structure is widely considered to be an ideal modern corporate governance structure in the current mature capital market that guarantees corporate stability and achieves long-term peace and stability. Due to the highly dispersed equity, the no-actual-controller structure allows shareholders to check and balance each other, avoiding the "one-man rule" of the company's major shareholders. At present, more than 200 A-share listed companies have adopted the no-actual-controller structure.

According to data from Gree's e-commerce and third-party e-commerce platforms, on Singles' Day this year, Gree Electric Appliances' sales across all product categories on the entire network exceeded 4.1 billion yuan, a year-on-year sales increase of 200%. The sales of air conditioners on third-party platforms exceeded 3.64 billion yuan, a year-on-year sales increase of 178%, ranking first in the entire network.

According to Gree Electric's quarterly performance report this year, in the first three quarters of 2019, Gree Electric achieved operating income of 155.04 billion yuan, a year-on-year increase of 4.26%; net profit attributable to shareholders of listed companies was 22.12 billion yuan, a year-on-year increase of 4.73%. However, it is worth noting that Gree Electric's operating income and net profit in the third quarter of this year increased by 0.03% and 0.66% year-on-year, respectively, which is almost no growth.

As the leader of the air-conditioning industry, Gree Electric has been the industry leader in terms of production and sales of household air conditioners for 24 consecutive years since 1995. Since 2005, it has led the global market share of household air conditioners for 14 consecutive years. After 30 years of development, Gree Electric proposed to transform into a diversified industrial group, aiming to develop comprehensively and coordinately in the fields of air conditioners, high-end equipment, household appliances and communication equipment.

At present, Hillhouse Capital, the company behind Zhuhai Mingjun, has officially become the largest shareholder of Gree Electric Appliances, which has changed the way people see Gree Electric Appliances. In the future, can Hillhouse Capital play a certain role in the business?