On April 29, 2024, Dingxin Communications (603421.sh) issued an announcement that because it failed to disclose in time that the company was suspended from bidding by the State Grid and the actual controller Wang Jianhua divorced and split shares, the Qingdao Securities Regulatory Bureau planned to take measures against the company and relevant responsible persons. Penalty, with a total fine of 2.75 million yuan. Among them, the company was fined 700,000 yuan and Wang Jianhua was fined 1 million yuan.
It is reported that as early as January 24, 2017, just over three months after Dingxin Communications went public, Wang Jianhua and Zhang Qi divorced and signed a property division agreement, stipulating that approximately 32.95 million shares of the company held by Wang Jianhua would be owned by his ex-wife Zhang Qi (The value was 1 billion yuan based on the current stock price). At the same time, it was agreed that Wang Jianhua should pay Zhang Qi 100 million yuan in cash.
However, due to the delay in paying the 100 million yuan in cash, Wang Jianhua was sued by his ex-wife Zhang Qi to the court, and some of his shares were judicially frozen. This secret divorce was only made public not long ago.
On April 30, 2024, Wang Xiaoyan, the securities affairs representative of Dingxin Communications, revealed to a reporter from the China Times that the reason why Wang Jianhua was sued by his ex-wife Zhang Qi to the court was mainly because the two parties had objections to the timing of the 100 million yuan cash payment. The agreement in Wang Jianhua's hand stipulated that payment would be made within 2025, but the agreement in the hand of his ex-wife Zhang Qi stipulated that the time would be 2022.
was fined for failing to disclose two major matters in a timely manner
Public information shows that Dingxin Communications is mainly engaged in electric energy measurement and data collection, medium and low-voltage distribution automation, intelligent fire protection and other businesses. The company was listed on the Shanghai Stock Exchange in October 2016, and its core customers are State Grid.
On April 28, 2024, one month after the case was filed for investigation, Dingxin Communications received a "Prior Notice of Administrative Penalty" issued by the Qingdao Securities Regulatory Bureau because it failed to perform its information disclosure obligations in a timely manner, which mainly involved two illegal facts.
First, Dingxin Communications learned on February 27, 2024 that State Grid had launched a bidding and procurement "circuit breaker mechanism" for all the company's procurement categories since February 18, and launched an investigation into the company's suspected violations. During the circuit breaker period, all the company's Products and services are eligible to win the bid. This matter is a major event that should be disclosed in a timely manner under the Securities Law, but the company did not disclose it until the evening of March 29, 2024.
It is reported that Dingxin Communications’ winning bid amount from the State Grid in 2022 is 1.651 billion yuan, accounting for 53% of the company’s audited operating income in 2022; the company’s winning bid amount from the State Grid in 2023 is 1.632 billion yuan.
Secondly, on January 24, 2017, Wang Jianhua and his ex-wife Zhang Qi signed a "Divorce Agreement", stipulating that Wang Jianhua held approximately 32.95 million shares of the company (accounting for 30.38% of the company's shares held by him, accounting for 30.38% of the company's shares at that time) 7.60% of the total share capital) is owned by his ex-wife Zhang Qi, and there is no need to go through the name change procedures. Zhang Qi entrusted Wang Jianhua to exercise all shareholder rights within 15 years and other terms. This matter is a major event that should be disclosed in a timely manner under the Securities Law, but the company did not make an announcement until April 3, 2024.
Qingdao Securities Regulatory Bureau stated that based on the facts, nature, circumstances and degree of social harm of the parties’ illegal acts, it plans to decide in accordance with the Securities Law: Dingxin Communications will be warned and fined 700,000 yuan; Wang Jianhua will be warned and punished The general manager Zeng Fanyi was given a warning and a fine of 500,000 yuan; the deputy general manager and board secretary Ge Jun was given a warning and a fine of 300,000 yuan; the deputy general manager Yuan Zhishuang was given a warning and a fine of 25 Ten thousand yuan.
Still waiting for the results of the State Grid investigation
"China Times" reporters learned that Dingxin Communications was suspended from the State Grid's qualification to win the bid because of bribery by former employees of the company.
On December 27, 2023, the People's Court of Duodao District, Jingmen City, Hubei Province ruled that Li Mouhua had accepted bribes, which involved a bribe of 1.85 million yuan from Xing, a former employee of Dingxin Communications. The company was adopted by the State Grid to adopt a "circuit breaker mechanism" due to the public opinion of the case. "During the circuit breaker period, the company's bid-winning qualifications for all products and services will be suspended.
However, Dingxin Communications stated that the matters involved in the case were the personal actions of the former employees, and the company did not instruct or instruct the former employees to pay bribes. The company has not received any legal documents or been required to cooperate with the investigation of the judicial and disciplinary inspection departments. The relevant effective judgments have not required the company to bear any responsibility, and the company's former employees have not been convicted of bribery.
In accordance with the relevant management regulations of the State Grid, after the cause is identified, if the supplier is not responsible, the professional competent department or relevant unit should immediately notify the material management department to terminate the treatment of the supplier; if the supplier is responsible and needs to be dealt with for bad behavior , the time during which bid-winning qualifications have been suspended shall be included in the bad behavior processing time. The circuit breaker period generally does not exceed one year and will be automatically lifted upon expiration.
Regarding the progress of the circuit breaker incident, Wang Xiaoyan responded to a reporter from China Times on April 30 that the company is still waiting for the investigation results of the State Grid and there is currently no precise information.
Dingxin Communications' latest financial report shows that the company's operating income in 2023 will be approximately 3.633 billion yuan, a year-on-year increase of 16.62%; the net profit attributable to shareholders of listed companies will be approximately 131 million yuan, a year-on-year increase of 10.57%. However, the company's performance dropped sharply in the first quarter of 2024, with a net profit loss of 105 million yuan.
According to the company's calculations, based on a one-year circuit breaker period, the "circuit breaker mechanism" will lead to a total decrease in the company's operating income of approximately 1.65 billion yuan in the next 3-4 years. In 2024, it will reduce the company's operating income by approximately 550 million yuan. In 2025, the company's operating income will be reduced by approximately 550 million yuan. It will reduce the company's operating income by approximately 850 million yuan.
The hidden secret of "arrears" of 100 million yuan in breakup fees
Behind the secret divorce incident, the reporter of "China Times" learned that there may be a "yin and yang divorce agreement".
On January 24, 2017, Wang Jianhua and his ex-wife Zhang Qi signed a "Divorce Agreement", stipulating that approximately 32.95 million shares of the company held by Wang Jianhua would be owned by Zhang Qi. This part of the shares is still held by Wang Jianhua. Zhang Qi entrusted Wang Jianhua to exercise all shareholder rights of this part of the shares on his behalf. The entrustment period is 15 years. Based on Dingxin Communications' closing price of 33.28 yuan per share on the day the agreement was signed, these shares are worth more than 1 billion yuan.
In addition, the divorce agreement also stipulated that Wang Jianhua should pay Zhang Qi 100 million yuan in cash or shares of equal value as compensation.
However, due to the delay in payment of the 100 million yuan, Zhang Qi sued Wang Jianhua to the Qingdao Laoshan District People's Court on August 17, 2022, demanding cash compensation of 100 million yuan and interest of 3.85 million yuan. On April 3, 2023, Zhang Qi filed an additional lawsuit, demanding corresponding equity dividends.
On August 22, 2023, the Qingdao Laoshan District People’s Court rejected the plaintiff Zhang Qi’s lawsuit in the first instance judgment. On December 13, 2023, after Zhang Qi appealed, the Qingdao Intermediate People's Court ruled to remand the case for retrial. It is reported that the case will be heard in court on May 9, 2024. During this period, on March 19, 2024, upon Zhang Qi's application, approximately 14.08 million shares of the company held by Wang Jianhua were judicially frozen, and the divorce dispute case became public.
Wang Xiaoyan told this reporter that Wang Jianhua and his ex-wife had no objections to the agreement on the equity split. The objections mainly occurred when the 100 million yuan in cash was paid. The agreed time in the agreement in Wang Jianhua's hand was before the end of December 2025, but the agreed time in the agreement in his ex-wife's hand was 2022.
Why do the two parties agree on inconsistent times? Wang Xiaoyan said about this: "I don't know either. Anyway, our leader assured me that his agreement is genuine. His fingerprints and signatures are indeed his own. It's hard to say what the other party said. We will wait for the hearing in May. Let’s see what the final decision will be.”
Wang Xiaoyan also said that Wang Jianhua did not tell the company’s securities affairs office about the divorce before. “If he had told us, we would have made an announcement if we had not delivered the shares.”
It is worth noting that Dingxin Communications’ stock price fell sharply after the disclosure violation incident. In April 2024, Dingxin Communications' cumulative decline reached approximately 30%. As of the close of trading on April 30, Dingxin Communications reported 5.7 yuan per share, with the latest market value of approximately 3.7 billion yuan.
According to the relevant provisions of the Securities Law, the information disclosure obligor fails to disclose information in accordance with the regulations, or the announced securities issuance documents, regular reports, temporary reports and other information disclosure materials contain false records, misleading statements or major omissions, causing investors If losses are incurred in securities transactions, the information disclosure obligor shall bear liability for compensation.
Lawyer Zang Xiaoli from Beijing Shize Law Firm told a reporter from the China Times that Dingxin Communications received advance fines due to suspected violations of information disclosure laws and regulations. It was purchased between January 24, 2017 and March 29, 2024, and Injured persons who sell or continue to hold shares on or after March 30, 2024 can sue for compensation, and the scope of claims will ultimately be determined by the court's judgment.
Editor in charge: Ma Xiaochao Editor-in-chief: Xia Shencha
