Cash Management Cooperation Agreement eight words, I am afraid in the future will become a word that makes A-share investors shudder.
On May 11, Kang Dexin issued a reply to the Shenzhen Stock Exchanges letter of concern, which officially unveiled the sudden incarnation of more than 10 billion yuan of funds in the account into zero.
According to Kang Dexins reply, the reason why the companys account was cleared came from a secret agreement signed between the company and its subsidiaries and Xidan Branch of Bank of Beijing. The agreement allows the companys funds to be pooled in other accounts controlled by shareholders, while banks still provide proof that the funds are still on the books.
Kangde New Announcement said that the company can not understand the trend of linked account funds, the company has complained to the relevant regulatory authorities, and applied to the court for additional Xidan branch as the defendant. The Bank of Beijing has previously responded to the media that the conclusion of the contract is in accordance with the law.
What is really worrying is that the so-called legal cash management cooperation agreement may in fact become a new channel for shareholders of listed companies to occupy the companys funds. Moreover, the occupancy of funds by this channel will not be reflected in the companys annual report. If such behavior can exist reasonably, it will obviously become the investment nightmare of ordinary investors.
Kang Dexins Self-Chen Ten Billions Paddle the Way
In the Spring Festival Gala sketch Heart Disease, Fan Wei once had such a line: Doctor, I dont want to know how I came from. I just want to know how I lost my place. Im afraid this is also the concern of Kangde New Investors. How come there is no more than 10 billion yuan of money?
According to Kangdes announcement, this situation resulted in the company joining the Cash Management Cooperation Agreement signed by Kangde Investment Group and Bank of Beijing Xidan Branch.
According to this agreement, Bank of Beijing Xidan Conduct Kangde Investment Group and its members (including Kangde New and its subsidiaries) provide such services as centralization of account funds, directional payment control, internal capital valuation, account and voucher services, and fund certification.
Among them, the function of account fund centralization includes that when the receipt of the sub-account occurs, the fund of the account is collected and recorded in real time. The directional payment control function allows the account to collect funds and make payments.
The function of capital certificate is the most magic. This service allows Beijing Bank to issue capital certificate or related deposit certificate for Kangde Group without enlarging the actual deposits of Kangde Group and its member units.
Together, these functions constitute a complete closed loop in which Kangdes new funds are pooled and can not be easily found by the outside world.
On the one hand, Kangde Group can collect the funds of Kangde New Stock Company into designated accounts through the function of aggregation. On the other hand, as long as the whole group has sufficient funds, the daily fund income and expenditure of Kangdeshin shares are still normal. Thirdly, the Xidan Branch of the Bank of Beijing will also issue capital certificates for the joint stock company in accordance with the so-called principle of keeping the accounts in line with the facts in accordance with the agreement.
As a result of this agreement, Kangde New Stock Company has not stayed in the company account for a long time to collect and pay the funds in the corresponding account, and has been delimited by shareholders, and has not been disclosed.
This Bureau was not exposed until Kangdesin could not withdraw funds from its account to pay bonds.
Who is responsible?
This is clearly a very bad and risky situation, especially for ordinary investors who are totally unaware of Kangdeshi. So who should be responsible for these actions and their consequences?
Kangde Group, the major shareholder of Kangde New, the companys successive senior executives and the board of directors are obviously inevitably involved.
According to the requirement of the independence of Listed Companies in Article 68 of the Listed Companies Governance Criteria (2018), Controlling shareholders, actual controllers and listed companies shall be separated from each other in personnel, assets and finance, independent in organization and business, independent in accounting and independently assuming responsibilities and risks.
The Shenzhen Stock Exchange also questioned the company and asked the company to reply, Is there a case where the companys funds are deposited into the accounts controlled by Kangde Investment Group and its affiliates through the Cash Management Cooperation Agreement, and whether it leads to Kangde Investment Groups non-operational occupation of the funds of listed companies?
The latest announcement also shows that the current financial officer of Kangde New Company could not explain why Kangde New and its subsidiaries joined the Cash Management Cooperation Agreement. The response is also telling.
At the same time, the role of Xidan Branch of Bank of Beijing in this process deserves consideration.
In its latest reply announcement, Kangdexin argued that the above-mentioned cash management services provided by Xidan Branch may lead to the confusion of funds between Kangdexin and Kangde Investment Group, the controlling shareholder, and questioned that the practices of Xidan Branch violated the requirements of the Corporate Governance Criteria of Listed Companies (2018) for the independence of listed companies.
Article 68 of the Standards for Governance of Listed Companies (2018) stipulates that controlling shareholders, actual controllers and listed companies shall be separated from each other in terms of personnel, assets and finance, independent institutions and businesses, and shall independently account for, independently assume responsibilities and risks.
The announcement also held that as the host bank of the Cash Management Cooperation Agreement, Xidan Branch concealed the problem of the deposit of money funds and did not prompt the company. Until the company cant pay the principal and interest on time.
The announcement also shows that Kangde New Company has complained to the securities and banking regulatory authorities and applied to the court for additional Xidan Branch as the defendant in the relevant lawsuit. The company is also waiting for the cooperation of Xidan Branch to explain the aforementioned situation.
In addition, relevant intermediaries, especially Ruihua Accounting Firm, which is responsible for auditing the companys annual reports, need to give explanations.
Kangdes new financial statements have been questioned by the market for a long time, and the relevant personnel of the Institute have issued unqualified audit opinions for a long time. The relevant information is not reflected in the special audit report of the summary table of the occupancy of non-operational funds and other related funds of related parties in previous years.
Cash Agreement has serious consequences
Whoever is responsible, the ultimate and biggest victim group is still the external investors who believe in Kangdes new earnings.
This loophole, in addition to the intentional action of relevant personnel, the cash management cooperation agreement signed by banks and listed companies and shareholders is the most direct boost tool.
In this agreement, shareholders can pool and use the funds of listed companies, and banks can issue so-called capital certificates for the accounts of listed companies that have been liquidated, which is undoubtedly a huge loophole.
This loophole seriously challenges the principle and bottom line of information disclosure of listed companies, and also leads to the potential risk of asset loss. If this behavior is not investigated and stopped, it may quickly become a convenient channel for major shareholders and controllers of listed companies to implicitly occupy the company.
In fact, how many supervisors and their shareholders have signed the Cash Management Cooperation Agreement and how many companies actually do not have their own funds on their accounts, which is probably the next question investors need to clarify urgently.
Source: Editor-in-Charge of Wall Street: Shi Jianlei_NBJ11331