Suspected of hindering the supervision and inspection of the China Securities Regulatory Commission *ST Changfang Subsidiary was put on file
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Burying accounting documents, hindering regulatory authorities from enforcing the law… Various violations of the *ST Changfang subsidiary eventually lead to bitter fruit. On the evening of February 6, *ST Changfang issued an announcement saying that because its holding subsidiary Changfang Group Kang Mingsheng (Shenzhen) Technology Co., Ltd. The China Securities Regulatory Commission decided to file a case against Kang Mingsheng Company.
Kang Mingsheng is a company acquired by *ST Changfang in 2015 at a cost of 528 million yuan to expand the LED industry. The management teams of both parties have continued to break out conflicts around the issue of Kang Mingsheng’s control rights since 2022, and once staged dramas such as public opinion attacks, listed companies blocking the door and checking, and subsidiaries calling the police.
According to the announcement of *ST Changfang’s reply to the letter of concern from the Shenzhen Stock Exchange, on July 12, 2022, the management of *ST Changfang learned that the original management team of Kang Mingsheng, mainly including Li Dichu, Nie Wei, and Peng Lixin, was suspected of concealing and deliberately destroying accounting documents. , the company immediately arranged personnel to stop and report to Shenzhen Longhua Police. On the same day, the police and relevant departments intercepted a whole vehicle of accounting documents outside the Shenzhen Kang Mingsheng factory area, and the whereabouts of two other vehicles were unknown. After counting, the batch of intercepted vouchers were Kang Mingsheng’s paper accounting and bookkeeping vouchers from 2013 to 2021.
On July 13, 2022, Peng Lixin, the former financial director of Kang Mingsheng, and others were suspected of concealing and deliberately destroying accounting documents in the Longhua Branch of the Shenzhen Public Security Bureau. After investigation, on November 1, 2022, the public security department seized buried original accounting documents, production and operation materials on the barren slope in the factory area of Jiangxi Kangmingsheng Optoelectronics Technology Co., Ltd., a wholly-owned subsidiary of Kangmingsheng.
After two days, a total of 377 boxes (plastic turnover box 50CM*40CM*30CM) of original accounting documents were excavated. The pit where the materials were buried was about 9 meters long, 5 meters wide and 5 meters deep. The period is from 2013 to 2021, and the buried materials are all original vouchers and documents used for accounting, including cost accounting data, income accounting data, salary accounting data, etc.; because the relevant materials were dumped and buried for a long time , most of the materials were directly buried without packaging, and the numbers on most of the certificates were blurred and unrecognizable, only the header and title of the document were still recognizable.
*ST Changfang announced that the original management team of Kang Mingsheng, mainly Li Dichu, Nie Wei, and Peng Lixin, was suspected of refusing or obstructing the securities regulatory agency and its staff from performing their supervisory and inspection duties in accordance with the law. Kang Mingsheng Company has removed Li Dichu as executive director on June 27, 2022, and removed Nie Wei as general manager and Peng Lixin as financial director on July 12, 2022. Report the crime to the public security organ. *ST Changfang has comprehensively strengthened the management and control of Kang Mingsheng Company.
*ST Changfang stated that the company supports and actively cooperates with the China Securities Regulatory Commission’s investigation of Kang Mingsheng Company, will pay close attention to the progress of the investigation, and urge Kang Mingsheng Company and its current management team to actively cooperate with the China Securities Regulatory Commission. Investigation work provides work convenience.
This “internal fighting” incident had a considerable impact on *ST Changfang’s operation. On January 31, 2023, the company released the 2022 annual performance forecast. It is estimated that the net profit loss attributable to shareholders of listed companies will be 160 million to 230 million yuan, and the non-net profit loss will be 180 million to 250 million yuan. The main reasons for the loss include “obstruction and sabotage by the original management team of the subsidiary Kang Mingsheng Company, production capacity and sales revenue have declined, and expenses have increased.”
In this regard, Liu Zhigeng, the chief consultant of Jiangsu Siwei Consulting Group and a well-known expert in financial and taxation review, believes that the comprehensive takeover and reintegration of the acquired target will help resolve various contradictions and problems with the acquired party in the merger and reorganization, or further discover and Solving the deep-seated problems existing in mergers and acquisitions will help promote the healthy development of all parties after mergers and acquisitions.
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