After Zhao Wei was punished, another highly leveraged snake swallowing elephant capitalist player followed suit.
At the beginning of June, Mao Fengli, the accuser of Kerong Environment (300152.SZ), received two Administrative Penalty Decisions and one Market Ban Decision from the SFC. In addition to being fined, she was also banned from the market for life. Mao Fengli holds the shares of Kerong Environment through her subordinate companies, which are all frozen by the judiciary.
In 2010, Kerong Environments went public. In 2016, Mao Fengli enlarged her leverage by 13 times to buy a controlling right by laying eggs with chickens.
In the same year, Mr. and Mrs. Zhao Weis, who enlarged their leverage 51 times to buy 10,000 cultural shares, were suspended by the regulators, fined in 2018 and banned from the securities market for 5 years, while facing joint and several liabilities of shareholderssuit and compensation.
After Mao Fengli became the real controller of Kerong environment, Kerong environment was publicly condemned by the exchange and issued a warning letter by Jiangsu Securities Regulatory Bureau.
In the Administrative Penalty Decision issued by the Securities Regulatory Commission, which disclosed the environment of Kerong, the irregularities of direct controlling shareholders and indirect controlling shareholders in the transfer of shares three years ago were restored.
False record of the quantity and total price of the purchased shares
The incident originated from the stock purchase in 2016.
Before that, the controlling shareholder of Kerong Environment was Xuzhou Jieneng Science and Technology Development Investment Co., Ltd. (hereinafter referred to as Jieneng Science and Technology, now renamed Xuzhou Fengli Science and Technology Development Investment Co., Ltd.), with 37 shareholders. On June 28, 2016, Kerong Environment released the Detailed Equity Change Report, which disclosed that 37 shareholders of Jieneng Technologies and Tianjin Fengli Innovation Investment Co., Ltd (hereinafter referred to as Tianjin Fengli) signed the Equity Transfer Agreement, transferring 91.96% of the shares of Jieneng Technologies to Tianjin Fengli at a price of 850 million yuan.
The registered capital of Tianjin Fengli is 100 million yuan, and the actual controller is Mao Fengli.
After the transfer, Tianjin Fengli became the controlling shareholder of Kerong Environments through Jieneng Technology. Jia Hongsheng, then chairman, resigned on August 6. The announcement at that time showed that he also held 5.18% of the shares of Jieneng Technology.
In January 2017, the shareholding of Jieneng Science and Technology changed. The 8.04% equity held by Jia Hongsheng and other three shareholders was transferred to Tianjin Fengli recently, but the specific transfer amount and date were not disclosed.
According to the Securities Regulatory Commissions Administrative Penalty Decision, on June 24, 2016, before the release of Kerong Environments Detailed Rights and Interests Change Report, Jia Hongsheng and other three shareholders had transferred their outstanding technology shares to Tianjin Fengli, which accounted for 8.04% of the total outstanding technology shares, and confirmed that they had received the transfer of shares.
Therefore, the 91.96% transfer of equity disclosed in the Detailed Equity Change Report is a false statement.
Why disclose 100% to 91.96%? The Decision on Administrative Punishment did not give an answer. The SFC found that there were false records on the quantity and total price of Tianjin Fenglis acquisition of outstanding technology shares.
The seller lent money to the buyer to buy his own equity
There are more extraordinary things than false records.
Tianjin Fengli needs to pay 850 million yuan for the acquisition of the shares, but only 63.06 million yuan. The other funds come from two parts, one part is the loan of 700 million yuan, the other part is from the sellers outstanding technology. That is to say, it is a 13-fold leveraged egg-by-chicken equity acquisition.
Mao Fengli is the protagonist who planned the transfer of shares. She and Jia Hongsheng agreed to remit 13695 million yuan of the funds from Jarong Technologies to Tianjin Fengli Bank account. The outstanding science and technology is the controlling shareholder of science and finance environment, which is obviously the related party of science and finance environment.
Its a tough thing to talk about. When I think about it, its the seller who borrows money from the buyer to buy his own equity.
In this way, Tianjin Fengli announced through the Detailed Equity Change Report issued by Kerong Environment that Tianjin Fengli has been transferred to the outstanding technology Equity Fund... There is no direct or indirect source of funds from listed companies and their affiliates, which is obviously a false record.
The Securities Regulatory Commission affirms that Tianjin Fengli and Jieneng Technologies are issuers, listed companies or other obligors of information disclosure... The information disclosed is falsely recorded.
Because of the above violations, Mao Fengli and Jia Hongsheng, former chairman of Kerong Environment, were fined by the SFC. Mao Fengli was also banned from entering the market for life because she misappropriated private fund property.
On August 10, 2018, Mao Fengli resigned as a director of the company. Mao Junliang, now chairman of Kerong Environment, is Mao Fenglis brother.
The companys stock prices have fallen steadily, falling by 34%, 9% and 61% in 2016, 2017 and 2018, respectively.
Li Jian, a lawyer of Zhejiang Yufeng Law Firm, told China Economic Weekly that according to the Securities Law and the judicial interpretation of false statements, controlling shareholders of listed companies were punished by the Securities Regulatory Commission for illegal disclosure of information, and the injured investors could sue for damages in accordance with the law.
In Li Jians view, according to judicial interpretation, the injured investors who bought Kerong Environmental Stock before the issuance of the detailed report on changes of rights and interests by Kerong Environment on June 28, 2016 and the issuance of the investigation notice by the SFC on December 1, 2017 and sold or continued to hold the stock after December 1, 2017 can sue Kerong Environmental Controlling Shareholders for claims according to law.
Li Jian believes that the CSRC has punished Zhongyuan Securities for failing to perform diligently during the period of serving as financial adviser. In addition to suing the controlling shareholders of Kerong Environment, investors can also add Zhongyuan Securities as the defendant.
The funds of listed companies are occupied and publicly condemned by Shenzhen Stock Exchange
In addition to the fact that false records were punished by the SFC in the course of stock purchase, Kerong Environment was publicly condemned by the exchanges for its capital being occupied by the related parties of controlling shareholders.
It is common for listed companies to provide financial support and loans to subsidiaries. If the subsidiary shares are transferred out, the arrears should be repaid in time. However, after the company transferred to Tianjin Fengli, the indirect controlling shareholder, the arrears were delayed, and eventually evolved into controlling shareholders occupying the funds of listed companies.
On June 24, 2016, Kerong Environment transferred 100% equity of its subsidiary to Tianjin Fengli. The subsidiary promised to return 69.86 million yuan of the funds it occupied and pay interest to Kerong Environment half a year later. Xuzhou Fengli Science and Technology Development Investment Co., Ltd. (hereinafter referred to as Xuzhou Fengli) provided joint and several liability guarantee for the above claims.
This Xuzhou Fengli, which was renamed by Jieneng Science and Technology, changed its name after being acquired by Tianjin Fengli.
However, nearly a year later, it was not until September 1, 2017 that Kerong Environment announced that it had received 74.4683 million yuan of Xuzhou Fenglis reimbursement on August 31, that year. However, these funds were also borrowed by Xuzhou Fengli and then recovered by Xuzhou Fengli on September 20, which was not disclosed until October 30, that year. However, such capital transactions have not been recorded in the environmental accounting books of Kerong.
In essence, the controlling shareholders of Kerong Environment have constituted the non-operational capital occupation of Kerong Environment. In December 2018, the Shenzhen Stock Exchange publicly condemned the financial environment, Mao Fengli, the actual controller, and the relevant responsible persons.
On April 27, 2018, Tianjin Fengli transferred the subsidiary to another buyer. The new takeover promised to repay the subsidiary by the end of 2018, but there was still no progress in repayment until January 4 this year.
Fictitious profit is supervised by Jiangsu Securities Regulatory Bureau
Compared with the non-recovery of arrears, the fictitious net profit of Kerong Environment in 2017 hurt investors more, and the current problem is more urgent.
In 2016, the first year that the new shareholders of Kerong Environment gained control, the company lost 132 million yuan in net profit in that year. In 2017, the profit was 37.46 million yuan, but after deducting the recurring profit and loss, the loss was still 55.44 million yuan. Because of the existence of non-recurring profit and loss, the net profit and loss changed in direction. The audit opinion is an audit report with reservations.
Net Profit Change of Kerong Environment in Recent 10 Years (Unit: 10000 Yuan)
At the beginning of this year, the Jiangsu Securities Regulatory Bureau of the SFC issued a decision on administrative supervision measures under the environment of science and finance. It found that in the companys report of 2017, there were six ways to adjust the profits of 2017, totaling 68.67 million yuan, by rushing back the long-term accounts receivable by withdrawing the commercial acceptance bill, and then excluding the provision for bad debts. It demanded that the company take effective measures to rectify and correct in time. u3002 The Jiangsu Securities Regulatory Bureau has taken measures to issue warning letters to Mao Fengli and others who were then directors.
On May 22, Kerong Environment made a correction to the 2008 report issued on April 26. From 2016 to 2018, net profit was - 132 million yuan, 103.2 million yuan and - 476 million yuan, respectively. The audit report included audit opinions with emphasis items, which included the occupancy of company funds by the related parties of controlling shareholders and the completion of rectification by the company in accordance with the requirements of Jiangsu Securities and Exchange Regulatory Bureau. Traceable adjustments. In order to remind investors to pay attention.
The risk reminder of Kerong Environment on June 4 shows that the shares of Xuzhou Fengli Company have been frozen by the whole judicial system, 97% of which have been pledged and touched the flat position line agreed upon in the agreement. All the stock pledge repurchase transactions have been breached. If enforced, the company may have the risk of the change of the actual controller.
Source: Qian Mingxiao_NBJ10675, Responsible Editor of China Economic Weekly