China-Singapore Jingwei, January 19th: Due to multiple violations, Zhonglu Holdings and its actual controller were publicly condemned or notified of criticism by the Shanghai Stock Exchange.
On the 19th, the Shanghai Stock Exchange issued the "Decision on Disciplinary Sanctions against Zhonglu Co., Ltd., the controlling shareholder Shanghai Zhonglu (Group) Co., Ltd., the actual controller and then chairman Chen Rong, the trustee and relevant responsible persons" (hereinafter referred to as "Disciplinary Decision").
The "Disciplinary Punishment Decision" shows that according to the "Decision on Issuing a Warning Letter to Chen Rong", "The Decision on Issuing a Warning Letter to Chen Shan" and "On the Issuance of a Warning Letter to Zhonglu Co., Ltd." issued by the Shanghai Securities Regulatory Bureau According to the facts and company announcements found in the "Decision on Letter of Measures" (hereinafter collectively referred to as "administrative regulatory measures"), Zhonglu Co., Ltd. has committed the following violations in terms of information disclosure and the performance of duties by the relevant responsible persons.
(1) The actual controller failed to fulfill his commitments, and the company’s information disclosure was untrue
According to the facts ascertained by administrative supervision measures, on June 20, 2014, Chen Rong, the actual controller of Zhonglu Co., Ltd., transferred the Shanghai Road Routing Information Technology held by him Co., Ltd. (hereinafter referred to as Lurou) transferred 10% equity to the company for 10 million yuan, and at the same time it made a compensation commitment. "Chairman Chen Rong promised to ensure that Lurou will pass external investment within the next 12 months after the industrial and commercial registration of the equity transfer is completed." The investor increased capital at a substantial premium to reach a valuation increase of 20 times... If Lulu failed to increase capital at that time, Chairman Chen Rong repurchased the 10% equity at a price of 20 times the added value, that is, RMB 200 million."
In December 2015, Zhonglu Co., Ltd. disclosed an announcement stating that Lurou signed a "Capital Increase Agreement" with Shanghai Zihui Dingli Investment Center (Limited Partnership) (hereinafter referred to as Zihui Dingli), and planned to invest in Zhonglu at an overall valuation of 6 billion yuan. Router’s capital increase is 300 million yuan, and Chen Rong’s gambling commitment will be terminated.
Subsequently, the Shanghai Stock Exchange issued two inquiry letters to Zhonglu Holdings, requesting the company to explain the status of Zihui Dingli’s funding.
On June 29, 2016, Zhonglu Co., Ltd. announced that Zihui Dingli’s capital increase of 300 million yuan has been fully received. However, administrative supervision measures revealed that from June 20 to June 23, 2016, Chen Rong used the method of circular fund transfer to construct a capital flow of 300 million yuan in remittances to Zihui Dingli Xianglu Road. In fact, the funds involved in the cycle were transferred in June 2016. On March 23, they finally returned to their original investors.
In summary, Lulu has not successfully increased its capital, and as of the date of administrative supervision measures, Chen Rong has not fulfilled its commitment to repurchase 10% of Lulu’s equity from Zhonglu Shares. At the same time, the company did not truthfully disclose the receipt of the capital increase from Zihui Dingli and the fact that Chen Rong’s compensation commitment was not completed, nor did it disclose the progress of Chen Rong’s implementation of the above commitments in the regular report from 2016 to 2022.
(2) Incomplete disclosure of related transaction information
According to the facts ascertained by administrative regulatory measures, Shanghai Zhonglu (Group) Co., Ltd. (hereinafter referred to as Zhonglu Group), the controlling shareholder of Zhonglu Co., Ltd., implemented the "Centralized Management of Funds" on January 1, 2012. The Implementation Rules stipulate that "Subsidiaries incorporated into the group's financial management center system must concentrate all funds into the group's capital pool and implement unified allocation and management by the group." Based on the above regulations, the company remitted four investment funds totaling 20 million yuan to the joint-stock company Lurou account on December 25, 2015. On December 29, 2015, the above investment funds were remitted by Lurou to the Zhonglu Group account; the company in 2018 From November 2019 to March 2019, four investment funds totaling 19.5 million yuan were remitted to the account of the joint-stock company Zhonglu Energy (Shanghai) Co., Ltd. (hereinafter referred to as Zhonglu Energy), all of which were remitted by Zhonglu Energy to the Zhonglu Group account on the day of remittance. .
According to the administrative regulatory measures, the company failed to disclose the situation that the funds of the participating companies will be collected by Zhonglu Group when disclosing the above-mentioned related-party transactions jointly invested with the actual controller and its related parties, and the disclosure of related-party transaction information was incomplete.
(3) Incomplete disclosure of information on the capital contribution of major shareholders
Zhonglu Energy was established by Zhonglu Energy in January 2017, and the "Announcement on the Transfer of Equity Interests and Related Transactions of Zhonglu Energy" was disclosed on June 1, 2017, transferring 90% of Zhonglu Energy The equity was transferred to Zhonglu Group. The announcement shows that after the transfer and industrial and commercial change procedures are completed, the company still needs to invest 900,000 yuan, and Zhonglu Group still needs to invest 9 million yuan.On August 4, 2017, the company disclosed the "Announcement on Foreign Investment to Increase the Equity of Zhonglu Energy and Related Transactions" stating that the company and Zhonglu Group will increase the capital of Zhonglu Energy. After the capital increase is completed, the cumulative investment amounts of both parties will be 22 million yuan and 1.98 million respectively. billion.
According to the facts ascertained by administrative supervision measures, on July 31, 2017, Zhonglu Group remitted 198 million yuan to Zhonglu Energy in two installments as investment funds. After capital verification, Zhonglu Energy remitted 198 million yuan to Zhonglu Group in two installments on August 1, 2017. Since then, the above-mentioned other receivables have been on the books. The four investment funds totaling 19.5 million yuan remitted by the company to Zhonglu Energy's account from November 2018 to March 2019 were all remitted from Zhonglu Energy to Zhonglu Group's account on the day of remittance. However, in June 2019, the company disclosed in a reply to the inquiry letter that "Zhonglu Group's 189 million yuan capital increase has been paid in full." It did not disclose that the capital increase of the participating companies had been collected by Zhonglu Group, and the information disclosure was not comprehensive and sufficient. .
(4) The judicial auction matters of the controlling shareholder were not disclosed in a timely manner
On June 2, 2023, the Shanghai Financial Court disclosed the "Shanghai Financial Court Judicial Disposal of Stocks Announcement (2023) Hu 74 Zhi No. 121" on the official website of the Shanghai Stock Exchange, intending to pass the bulk stock judicial The execution platform assisted in the public auction of 41.0107 million company shares held by Zhonglu Group, the company’s controlling shareholder, accounting for 12.76% of the company’s total share capital.
On July 7, 2023, the Shanghai Financial Court announced on the official website of the Shanghai Stock Exchange that the auction of 4.1 million shares had been completed, and announced on July 13 that it would continue to auction the remaining 11.50% of the company's shares held by Zhonglu Group. The company's controlling shareholder's equity was publicly auctioned for judicial auction, involving a high number and proportion of shares. However, the controlling shareholder failed to disclose relevant information through the company in a timely manner, resulting in untimely disclosure of relevant information.
(5) Untimely disclosure of major arbitrations
On April 22, 2023, the 2022 annual report disclosed by Zhonglu Co., Ltd. showed that due to a pending arbitration case involving a franchise contract dispute by its wholly-owned subsidiary, Forever Company, it was required to bear joint and several compensation. Therefore, the company has accrued estimated liabilities of 41.11 million yuan, accounting for 111% of the net profit attributable to the parent company in 2021. At the same time, 13.34 million yuan of the company's monetary funds at the end of the period were frozen due to arbitration matters. In this regard, the Shanghai Stock Exchange issued regulatory work letters twice on May 27 and July 18, 2023 respectively, requiring the company to supplement the disclosure of the specific circumstances of the pending arbitration involved in the company.
According to the announcement in response to the regulatory work letter disclosed by Zhonglu Co., Ltd. on July 26, 2023, starting from 2018, the company’s wholly-owned subsidiary Permanent Company has authorized the use of trademarks to external parties and opened franchises on a large scale. Because some franchisees are on the verge of losing money, many franchisees The merchant applied for arbitration to seek financial compensation from the permanent company. As of the end of June 2023, the total subject amount of the above cases was 62.9701 million yuan, accounting for 10.76% of the company's audited net assets in 2022. However, the company did not promptly disclose the arbitration matters involving its wholly-owned subsidiaries until July 26, 2023, when it responded to the Shanghai Stock Exchange It will be disclosed only when the supervisory work letter is issued. It has also been found that as of the date of the announcement, the above-mentioned cases are all in the process of arbitration.
(6) Report on changes in undisclosed equity of the voting rights trustee
As of June 21, 2023, Zhonglu Group, the controlling shareholder of Zhonglu Group, holds 83.919 million shares of the company, accounting for 26.11% of the company’s total share capital. According to the company's announcement on June 21, 2023, the company's controlling shareholder Zhonglu Group entrusted all voting rights corresponding to its 26.11% shares (including but not limited to proposal rights, voting rights, director and supervisor nomination rights, etc.) to Hainan Zhonghe Hengfeng No. 1 Investment Management Partnership (Limited Partnership) (hereinafter referred to as Hainan Zhonghe). After the voting rights are entrusted, the number of shares held by Zhonglu Group that can actually control the voting rights is 0, and Hainan Zhonghe holds the largest share of the company's voting rights. On August 19, 2023, the company disclosed an announcement stating that Zhonglu Group withdrew the voting rights entrustment and reached a verbal agreement with Hainan Zhonghe, and a formal termination agreement will be signed later.
According to relevant rules, an investor’s interests in a listed company include shares that are not registered in his name but that the investor can actually control the voting rights. Zhonglu Group's act of entrusting voting rights to Hainan Zhonghe involves changes in voting rights that both parties can actually control. However, Hainan Zhonghe failed to fulfill its obligation to disclose changes in equity in accordance with regulations, which affected investors' right to know.
In view of the above-mentioned violation facts and circumstances, and in accordance with relevant regulations, the Shanghai Stock Exchange made the following disciplinary decision: punished Zhonglu Co., Ltd. and its controlling shareholder Shanghai Zhonglu (Group) Co., Ltd., the actual controller and then chairman Chen Rong, the then chairman and General manager Chen Shan publicly condemned , and notified and criticized the then financial director Sun Yunfang, the then board secretary Yuan Zhijian, and the trustee Hainan Zhonghe Hengfeng No. 1 Investment Management Partnership (Limited Partnership).
Public information shows that Zhonglu Co., Ltd. produces and operates "Forever Brand" bicycles and "Zhonglu Brand" fully automatic bowling equipment.
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In the secondary market, Zhonglu shares have continued to fluctuate and fall since setting a new high of 37.48 yuan/share in early November 2022. The latest closing price was 11.3 yuan/share, with a cumulative decline of 69.85% in the past 14 and a half months. (China-Singapore Jingwei app)
