More than 1 billion illegal guarantees from St Jitang

category:Finance
 More than 1 billion illegal guarantees from St Jitang


Two illegal guarantees by controlling shareholders

For the investors of * ST Jitang, the companys thunder is endless.

After being investigated by the CSRC, disclosed that the controlling shareholders and their related parties occupied more than 1 billion yuan of funds, and the annual report was issued with non-standard opinions, on the evening of the 9th, * ST Jitang announced again that according to the information provided by the companys controlling shareholders and relevant operators, the company had violated the external guarantee without performing the relevant internal approval decision-making procedures.

Tongjitang, the controlling shareholder of the company, was the initiator of the two illegal guarantees.

*The first illegal guarantee disclosed by St Jitang in the announcement is that in September 2018, Tongjitang technology, a holding subsidiary of Tongjitang, signed a financing cooperation framework agreement with Juzhou assets to establish a fund. Tongjitang technology invested 200 million yuan into Juzhou assets for Tongjitang holdings to invest in a private hospital. The company signed a balance replenishment commitment letter with Juzhou assets for the project of 200 million yuan of investment funds, which agreed that the company would undertake the obligation to make up the difference for the repayment of fund investment repurchase price and various debt related expenses. After the maturity of the financing funds, Tongjitang technology failed to repay in full. Juzhou assets filed a lawsuit and listed the company as one of the defendants. At present, the actual guarantee amount is 192 million yuan.

In January 2018, Tongjitang holdings signed a partnership agreement with Shenwan Hongyuan securities and other investors to establish an industrial fund. Shenwan Hongyuan, as a priority LP of the fund, contributed 1 billion yuan, junchuang asset contributed 495 million yuan as a mezzanine, and Tongjitang holdings contributed 100 million yuan as a general partner. Tongjitang holdings as one of the fund GP, and as the fund underworld.

*Stjitang, Tongjitang holding and shenwanhongyuan signed the balance replenishment agreement and share acquisition agreement. According to the balance replenishment agreement, if Shenwan Hongyuan does not fully receive all the income that should be distributed, Tongjitang holdings and * ST Jitang will make up the difference. According to the share purchase agreement, Tongjitang holdings undertakes the purchase obligation of 1 billion yuan of fund units held by Shenwan Hongyuan. If Tongjitang holdings fails to fulfill the acquisition obligations, * ST Jitang undertakes the acquisition obligation of Shenwan Hongyuans shares in the fund. At present, the actual guarantee amount is 1 billion yuan. In April 2020, Shen wanhongyuan filed a lawsuit against Tongjitang holdings and the company for failing to obtain the fixed income of the fund on schedule.

*St Jitang said that after verification, the above-mentioned illegal guarantee events occurred in the process of financing incubation of the big health industrial chain project by the controlling shareholders to promote the coordinated development of various businesses of Tongjitang group. The failure of relevant internal control system of the company has led to the occurrence of the above-mentioned violations. The above-mentioned illegal guarantee matters have not been deliberated by the board of directors or the general meeting of shareholders of the company, and the approval procedures of the companys seal have not been performed.

The failure of internal control has been exposed for a long time

The total litigation amount of * ST Jitang caused by the above controlling shareholders illegal guarantee and other reasons was 1.28 billion yuan, accounting for 19.92% of the companys latest audited net assets. The two illegal guarantees and three other lawsuits disclosed on August 9 led to the freezing of 1.23 billion assets of the company, accounting for 19.16% of the latest audited net assets of the company.

*St Ji Tangs internal control failure has been exposed when the annual report of 2019 is disclosed.

*St Ji Tang annual audit organization has clearly pointed out in the 2019 annual internal control audit report that the company has systematic failure defects of internal control. The company and many subsidiaries have systemic internal control failure in capital activities, procurement business, sales business, asset management, accounting and financial reporting related internal control.

According to the companys annual report of 2019, during the report period of 2019, the companys controlling shareholders and their related parties Tongjitang technology, ocean international travel, through suppliers and other non related parties, occupied a total of 1.047 billion yuan of funds, accounting for 16.27% of the companys latest audited net assets.

The internal control audit report also pointed out that the company had abnormal capital flow. In 2019, the company failed to perform the prescribed approval procedures and paid large amount of funds. Among them, through accounts payable, other receivables, other accounts payable and other subjects, a large number of capital transactions with many units. As of the end of 2019, the balance of such prepayments, accounts payable, other receivables and other receivables were RMB 95.1677 million, RMB 247.868 million, RMB 258.551 million and RMB 108.9107 million respectively, so the nature of the above funds and the nature of the transaction could not be confirmed. After the disclosure of the annual report, the company received the regulatory inquiry letter from the exchange and asked for a reply before July 11. But after several delays, the company has not responded. On August 10, * ST Jitang opened with a limit of 1.93 yuan. On the afternoon of the 10th, daily economic news reporters repeatedly called the Secretary Office of * ST Jitang, but they were unable to get through. Source of this article: Yang Bin, editor in charge of daily economic news_ NF4368

The internal control audit report also pointed out that the company had abnormal capital flow. In 2019, the company failed to perform the prescribed approval procedures and paid large amount of funds. Among them, through accounts payable, other receivables, other accounts payable and other subjects, a large number of capital transactions with many units. As of the end of 2019, the balance of such prepayments, accounts payable, other receivables and other receivables were RMB 95.1677 million, RMB 247.868 million, RMB 258.551 million and RMB 108.9107 million respectively, so the nature of the above funds and the nature of the transaction could not be confirmed.

After the disclosure of the annual report, the company received the regulatory inquiry letter from the exchange and asked for a reply before July 11. But after several delays, the company has not responded.

On August 10, * ST Jitang opened with a limit of 1.93 yuan. On the afternoon of the 10th, daily economic news reporters repeatedly called the Secretary Office of * ST Jitang, but they were unable to get through.