Trainee reporter Wen Yan
On the evening of April 24, ST Hengjiu announced that the company received the "Supervision Letter on Promoting the Rectification of the Company's Violations and Doing a Good Job in the 2023 Annual Report" jointly submitted by the three independent directors on the same day.
So far, 10 A-share companies have received INED supervision letters in 2024. In the supervision letter, the INEDs focused on issues such as the company and its actual controller being placed on file for investigation, previous capital occupation, and the disclosure of the company's 2023 annual report.
Supervise 6 risk warning companies
The six risk warning companies supervised by the INEDs are ST Hengjiu, ST Dr. Peng, ST Huatie, ST Shentian, *ST Medium-term and *ST Meisheng.
In the supervision letter, the INEDs focused on the company's previous problems such as capital occupation and illegal guarantees.
For example, *ST Meisheng has the non-operating capital occupation of the controlling shareholder, and according to the relevant provisions of the "Shenzhen Stock Exchange Stock Listing Rules", the company's shares have been subject to other risk warnings since the market opened on June 6, 2022.
*ST Meisheng INED stated in the supervision letter that he paid close attention to the implementation of the company's corresponding rectification, and repeatedly reminded and urged the company's management to recover all the occupied funds in accordance with laws and regulations, and effectively safeguard the interests of all shareholders, especially small and medium-sized shareholders.
INEDs focus on the issue of capital occupation, mainly because the impact of this issue is expanding.
ST Huatie INED mentioned in the supervision letter that if the company fails to solve the problem of capital occupation in a timely manner, or fails to provide a repayment plan with certainty of the source of repayment, it may lead to the company's 2023 annual audit report being issued by the annual audit accountant who cannot express an opinion or the internal control audit report is issued a negative opinion.
The independent director of ST Huatie said that if the above situation occurs, in accordance with the provisions of the stock listing rules and other relevant laws and regulations, it will disclose the announcement of the company's shares being delisted and other risk warnings in the 2023 annual report.
Filing and investigation has become the focus of attention
Summarizing the above-mentioned supervision letters, the INEDs of a number of A-share companies first mentioned that the company and its controlling shareholder were placed on file for investigation.
For example, on April 17, ST Hengjiu received a notice from its controlling shareholder and actual controller, Yu Rongqing, who received the "Notice of Case Filing" issued by the China Securities Regulatory Commission due to suspected violations of information disclosure laws and regulations.
On November 9, 2023, ST Hengjiu received the "Notice of Case Filing" issued by the China Securities Regulatory Commission on suspicion of illegal information disclosure.
In the supervision letter, the independent director of ST Hengjiu stated that he communicated with the company's management many times through interviews, letters and communications, carried out investigation and verification, and urged the company to do a good job in internal control in strict accordance with the internal control standards of the China Securities Regulatory Commission, the Shenzhen Stock Exchange and listed companies, and always pay attention to the implementation of the company's relevant rectifications.
At present, in response to the existing investigation results, INEDs require the Company to actively strengthen the management and rectification of internal control, and disclose information in a true, accurate, complete and timely manner.
Previously, the Guangdong Securities Regulatory Bureau issued the "Administrative Penalty and Market Ban Prior Notice", which showed that ST Huatie and the actual controller Xuan Ruiguo were suspected of violating laws and regulations in information disclosure, including: first, there were false records in the company's 2020 annual report and 2021 annual report, and second, the company failed to disclose related party transactions in accordance with regulations, and there were major omissions in the 2019 annual report, 2020 annual report, 2021 annual report, and 2022 annual report. As of December 31, 2022, the balance of funds occupied by ST Huatie's controlling shareholders and its affiliates with non-operating funds (including the total principal and interest) amounted to approximately 1.338 billion yuan.
INEDs supervise rectification
In response to the problems existing in the above-mentioned 10 A-share companies, the INEDs all put forward a number of rectification requirements in the supervision letter.
For example, ST Permanent Independent Directors put forward a number of opinions in the supervision letter. First, the INEDs urged the Company and its management to pay close attention to the progress of the investigation, and reminded them to fully cooperate with the investigation of the regulators, implement rectification as soon as possible and eliminate adverse impacts, and secondly, urge the Company to promote the rectification of relevant violations of laws and regulations as soon as possible, strengthen the requirements of internal control and standardized management, and complete the audit of the Company's 2023 annual report as soon as possible to ensure that the Company's 2023 financial data can truly and objectively reflect the Company's operation in 2023.
The reporter noted that in response to the disclosure of the 2023 annual report, the independent directors of the above-mentioned 10 A-share companies have put forward various opinions.
Among them, ST Hengjiu INED urged the company to provide all the materials required for review to the INED within the specified time in strict accordance with the requirements of relevant laws, regulations and rules, so as to ensure that the INED has sufficient time to complete the review and verification procedures, and ensure the smooth convening of the company's board meeting and the disclosure of the 2023 annual report on schedule.
Dr. ST Peng, an INED, specifically reminded that the management should disclose true, accurate and complete annual reports in accordance with laws and regulations. If the request cannot be completed within a reasonable time, and thus the INED's concerns cannot be alleged, the INED does not rule out requesting a third-party intermediary to review the relevant financial matters or take other measures.
Editor: Joey
Review: Xu Wen