12.2 billion of the companys major shareholders have been criminally coerced

 12.2 billion of the companys major shareholders have been criminally coerced

* ST Kangdes major shareholder and accuser Zhong Yu were taken criminal coercive measures by the police for suspected crimes.

The news is another blow to STKangdes 155,500 shareholders, who have just experienced several setbacks.

Earlier, * ST Kangdes earnings showed that 12.2 billion yuan on its books suddenly disappeared and the company said the money was deposited in the Bank of Beijing. The Bank of Beijing said the balance was 0. The market is also widely questioned that major shareholders have removed 12.2 billion of listed companies.

Every editor noticed that in the past month, at least three companies were detained, and the performance thunderstorm index, which rose sharply at the beginning of the year, dropped by more than 16% in nearly 20 trading days.

Data source: Wind

Criminal coercive measures have been taken against accused persons suspected of committing crimes

On May 12, 2019, Zhong Yu, chairman of Kangde Group, major shareholder of Kangde New Composite Materials Group Co., Ltd. (* ST Kangde) and actual controller, was taken criminal coercive measures by the police for suspected crimes, according to the official Weibo of Zhangjiagang Public Security Bureau.

According to public information, Zhong Yu, born in 1950, was the first entrepreneur to resign from the state-owned unit in Zhongguancun in 1988 and founded Kangde Electrical and Mechanical Technology Development Company, the predecessor of Kangde Group, in order to develop electric vehicles.

Every editor noticed that Zhong Yus last appearance in the public eye was on February 16 this year, when he gave a speech at the 19th Annual Conference of the Abu Li China Entrepreneurs Forum.

Zhong Yu said that his military career had a positive impact on his entrepreneurship, which made him understand that business can not be blindly desperate, to be wise and self-preservation, especially today, for private enterprises, we have to survive first.

In response to the recent default of Kangdesins many bonds, he said:

Kang Dexin was hit hard by bank loans and the stock market last year, but a series of measures are being taken to revive Kang Dexin and Kang Dexin.

On February 12, * ST Kangde announced that Zhong Yu resigned from the companys chairman and other related positions for personal reasons, and still served as the chairman of Kangde Group after resigning as the actual controller of ST Kangde New.

According to Wind data, * ST Kangdes share price hit a high of 68.12 yuan per share (no reinstatement) on May 25, 2015, followed by a general downward trend, with the latest share price closing at 4.07 yuan per share.

Photo Source: Wind

Wind statistics also show that in November 2017, Kangdesins market value once approached 100 billion yuan, reaching a maximum of 94.266 billion yuan, while by the end of May 10, its market value was only 14.411 billion yuan, shrinking by more than 80%.

It is worth mentioning that since this year, a number of listed companies have issued announcements on suspected criminal offences, such as controlling shareholders, prosecutors and executives.

On May 7, Kaiying Network (002517), Progress Notice on the Disjointing of Controlling Shareholders and Actual Controllers

The announcement said that on May 6, 2019, the company received a Letter of Notification from Mr. Wang Yues family, who said they had recently received a Detention Notice from the Shanghai Public Security Bureau. Mr. Wang Yue was detained by the Shanghai Public Security Bureau for alleged manipulation of the securities market.

On April 27, Great Wisdom (601519), Announcement on the Investigation of Controlling Shareholders of Companies by Public Security Organs

The announcement said that on April 26, 2019, the board of directors of the company was informed that Mr. Zhang Changhong, the controlling shareholder and the actual controller, was detained and investigated by the public security organ for the offence of violating the rules and disclosing important information in the Decision on Administrative Punishment of the China Securities Regulatory Commission (No. 2016]88) in 2016.

Large shareholders suspected of embezzlement of funds

On April 30, * ST Kangde released its annual report for 2018, which showed that 12.21 billion yuan of cash was deposited in Xidan Branch of Bank of Beijing. However, both accounting firms and board members questioned the authenticity of the report, and the companys annual report was also issued with non-standard opinions. Ten billion dollars of cash has become a mystery, which has caused a great uproar in the market. On that day, independent director Chen Dong submitted a written resignation report.

Subsequently, the Shenzhen Stock Exchange issued a letter of concern requesting * ST Kangde to explain the use of 12.21 billion yuan deposited in the Bank of Beijing and disclose the cash management agreement signed with the Bank of Beijing Xidan Branch.

On May 5, Du Wenjing, Secretary of ST Kangde, resigned.

On May 7, * ST Kangde responded to the Shenzhen Stock Exchanges letter of concern that 12.21 billion yuan of cash deposited in the Bank of Beijing is a capital reserve for the companys project operation and overseas M&A. * ST Kangde disclosed a cash management agreement in its reply, indicating that it and its controlling shareholder Kangde Investment Group have accounts with the Bank of Beijing.

On May 8, the Shenzhen Stock Exchange sent another letter of concern to * ST Kangde, asking it to explain the specific content of the cash management agreement and whether the agreement resulted in Kangde Investment Groups non-operating occupation of listed company funds.

On the evening of May 10, ST Kangde responded to the second letter of concern of Shenzhen Stock Exchange on the companys 12.2 billion yuan of currency funds. The company disclosed the Cash Management Cooperation Agreement signed by the controlling shareholder Kangde Investment Group and Bank of Beijing Xidan Branch (hereinafter referred to as Xidan Branch). According to this agreement, Kangde Investment Group and * ST Kangdes account can achieve the function of up-transfer and down-transfer; therefore, Kangde Investment Group has the opportunity to withdraw funds from its own account from Kangdes new account. Particularly noteworthy is that the agreement stipulates that Party A and its member units understand and agree that presenting the balance will serve as the basis for the authority to inquire, freeze and deduct its account.

It is against this background that * ST Kangde, whose actual balance is 0, can also show tens of billions of deposits.

In addition, * ST Kangde said that it was not clear whether the companys funds had been occupied by Kangde Investment Group non-operating.

* ST Kangde also confirmed in its reply that an advance payment made by * ST Kangde to China Chemical Cycling was actually entered into the account of Kangde Investment Group, a major shareholder.

Chairman of the Securities Regulatory Commission: Let violators pay a heavy price

Every editorial notes that on May 11, the annual meeting of the Association of Listed Companies of China was held. Yi Huiman, chairman of the Securities Regulatory Commission, attended the meeting and delivered a speech entitled Focusing on Improving the Quality of Listed Companies, Tamping the Foundation of a Vigorous and Resilient Capital Market. The issue of supervision of listed companies was discussed in detail.

In his speech, Yi Huiman said that the major shareholders of listed companies and Dong Jiangao must firmly adhere to the four bottom lines:

The first is not to disclose false information.

The second is not to engage in insider trading.

The third is not to manipulate stock prices.

Fourth, it does not harm the interests of listed companies.

Yi Huiman said that, compared with the four bottom lines, listed companies should seriously carry out self-examination and self-correction. If they refuse to rectify or fail to rectify the problems seriously, the SFC will comprehensively use administrative measures to investigate the responsibility of the company, especially the major shareholders and the real controllers of the listed companies.

When talking about the supervision of listed companies, Yi Huiman said that raising the cost of violation is the core measure. We should promote the revision of securities law, company law, criminal law and relevant judicial interpretations, innovate law enforcement means, study and optimize institutional mechanisms such as public condemnation and rewarding reporting, increase auditing efforts, strengthen the deterrence of supervision, and let those who do bad things pay the price and let them be lucky. People stop in time.

Source: Daily Economic News Author: Li Jinghans Responsible Editor: Su Honghong_NBJ9980