Suspected Illegal Disclosure Of Information, Herme Group Was Filed By The SFC

In the morning of May 28th, *ST Herman (002356.SZ) opened the market without suspense.

In the evening of May 27th, *ST Herme announced that it had received the notice from the SFC.

The notice pointed out that because of the company's alleged information disclosure violations, according to the relevant provisions of the securities law, the securities and Futures Commission decided to investigate the company.

In fact, since the end of 4, *ST Herman executives in the annual report "exposed their dirty linen" and said that "the authenticity, accuracy and completeness of the contents of the company's 2018 annual report" can not be guaranteed. The problem of the company has been thoroughly exposed, and has caused continuous attention from regulators.

The company's share price also began to show a continuous limit. From April 29th to May 28th, the 18 trading days, *ST Herme shares were all down, and as of May 28th, the market value of the company has shrunk by about 9 billion 400 million yuan compared with the March high.

In the stock bar, investors are also fond of the "big push": "knees for the delisting", "quickly check the company's problems", "how to claim", "flicker restructured junk stocks"...

Investors from March when the company announced the excitement of mutual entertainment with the hero, step by step to today's constant Thunderstorm "loss buried" "miserable."

Admission violation guarantee

Prior to the receipt of the investigation notice, *ST Herman has acknowledged the existence of a violation of security in reply to the letter of concern from the Shenzhen Stock Exchange.

In the audit report, the accounting firm pointed out that the disclosure of the company as a guarantor, the controlling shareholder and related parties of Herme group did not use the Huizhou Hao Ning Da seal of Herme group and its subsidiary company in accordance with the prescribed procedures, which led to the fact that the ho Mei Group and its subsidiary, Huizhou Hao Ning Da, had not undertaken any external security issues approved by the board of directors or shareholders' meeting, nor did they fulfill the obligation of information disclosure in time.

Because the controlling shareholder is above the internal control and the internal control is invalid, we can not confirm the authenticity and integrity of the guaranty information of Herme group, and can not predict the impact of the external guarantee on the financial statements of Herme group.

In addition, the company executives also put a spade a spade in the annual report: the controlling shareholders and their affiliated parties are weak in operation awareness, overriding the internal control. The company's relevant agencies can not resist the pressure of the controlling shareholders and their associated parties and fail to effectively implement the internal control system of the company. The company's controlling shareholders and their related parties have not passed the decision procedure of the listed companies, and they decide the illegal items such as the foreign guarantee and the signing of the loan agreements that have not entered the company's book funds.

In this regard, *ST and Herman disclosed details of the violation of external guarantees. Data showed that between February 2018 and June, *ST and Hertz jointly provided 7 violations of security for Wang Lei and he secured the sum of 780 million yuan, all of which were secured by related parties.

In addition, the company still has 3 unsecured procedures. The guarantee is for each KRA, Ho Ning Da Industry and the first HCH investment. The total guarantee amount is 183 million yuan, and only the first HCH investment is related party guarantee.

The first investment is the largest shareholder of Hanqiao control plant of *ST Hertz, and the legal representative, Wang Lei, is also chairman of *ST Herme.

Illegal guarantee responsibility

As a matter of fact, the reasons for the violation of warranty disclosed by *ST and Herman also fully reflect the internal control of the company.

For the guarantee of Ho Ning Da industry, *ST Hertz said that in August 25, 2017, the twenty-fourth board meeting of the Fourth Board of directors of the company was considered and approved by the twenty-fourth board (Provisional) meeting of the wholly-owned subsidiary of Ho Ning Da Industrial Company (formerly known as Shenzhen Yinjun Technology Co., Ltd.) to apply to the Bank of Beijing for an integrated credit line of 1000 million yuan, providing a guarantee period of one year.

After the guarantee expired, the relevant financial officers of Ho Ning Da industry did not understand the regulations because they did not understand the regulations. They thought the amount was small and did not report to the company headquarters. The chairman of the company signed the renewal guarantee agreement, and the company failed to carry out the internal deliberation procedure.

Conclusion: mistake of financial personnel

For the guarantee of every carat, *ST Hertz said that in June 23, 2017, the eighteenth session of the Fourth Board of directors of the company considered and adopted a guarantee for a wholly owned subsidiary to apply for an integrated credit line of 1.3 billion yuan per gram to Jinzhou bank for a period of one year.

Each gram of Latin America completed its equity changes in December 18, 2017 and is no longer a wholly owned subsidiary of the company.

After the guarantee expired, every gram of Latin America did not inform the company of the renewal loan situation. The chairman of the company signed the renewal guarantee agreement, and the company failed to carry out the internal deliberation procedure.

Conclusion: Latin American mistakes per gram

In response to the guarantee for the investment of related parties, the *ST hermark pointed out that in the year of 2018, by the leverage of the financial market, financial institutions tightened all the new loans and renewal businesses, and the pledge loans from the first investment to the financial institutions could not be renewed.

Due to the change of macroeconomic policy, the investment and financing environment of the first HCH is deteriorating, capital turnover is difficult, and new institutional loans can not be obtained. Only the high cost private loans can be used to return the hypothecated loans of the above-mentioned financial institutions.

During this period, the company's share price was greatly reduced by the overall environmental impact of the two tier market, which directly led to a serious shrinkage in the interests of the first HCH investment stock.

The creditors of the above private lending think that the investment credit condition of the first Hector is not enough to cover the creditor's rights and is eager to recover the loan.

As the pledge ratio of Hanqiao Machinery Factory is close to 100%, the first Hector investment is unable to repay the above-mentioned private loans. The creditors demand that the listed companies with better credit standing as the guarantor increase their credit by sealing up the stock and litigation.

Due to fear that the stock was seized or lawsuits would cause other creditors to follow suit, there would be a large number of lawsuits and seizures, and the debt crisis could be pmitted to the listed companies. Therefore, they were forced to accept private seals to ease the litigation seizure behavior of creditors, and strive for time to solve related problems, so as to reduce the probability of debt crisis of listed companies.

Conclusion: the company is forced to helplessly.

The letter is illegal.

In addition to the violation guarantee, the Shenzhen Stock Exchange also pointed out the problems of *ST's related party's non operating capital occupation and other issues in the letter of concern.

It is worth mentioning that after the Shenzhen Stock Exchange had already asked *ST Herman about the violation guarantee and the related party's non operating capital occupation, the company did not reply truthfully.

In the letter of concern, the management department of the SME Board of the Shenzhen Stock Exchange pointed out that in December 7, 2018, January 29, 2019 and March 11th, our ministry sent a letter to inquire whether your company had any violation guarantee, the controlling shareholder and its associated party's non operating capital occupation, and the freezing of bank accounts.

Your company replied that as of the date of reply, your company only provided 350 million yuan violation guarantee to the shareholder of the Beijing holding company, the controlling shareholder, and found no other illegal guarantee, capital occupation or freezing of the main bank account.

Please explain the specific reasons why your company did not disclose the above matters in time. Whether there is any false record, misleading statement or major omission in the early stage of information disclosure.

Please check the accountant and lawyer for verification and issue special opinions.

In response, *ST Herme replied:

According to the provisions of the second and seventy-first item (two) of the administrative measures for information disclosure of listed companies, the information disclosure obligor shall disclose the information truthfully, accurately, completely and promptly without any false record, misleading statement or major omission. In a timely manner, it refers to the two trading days from the date of the start or the time when the disclosure is reached.

In 2018, there were violations of guarantee, occupation of non operating capital by controlling shareholders and related parties, major litigation and freezing of main bank accounts.

The company did not disclose the disclosure in time, and there were misleading statements or omissions in the information disclosure, which was not in line with the management measures for information disclosure of listed companies.

The provisions of second and seventy-first item (two).

Accountants and lawyers held that the violation of Herme group, the non operating capital occupation of controlling shareholders and related parties, major litigation and freezing of major bank accounts were not disclosed in a timely manner at the time of disclosure, and did not comply with the provisions of the second and seventy-first (two) Regulations on the management of information disclosure of listed companies.

This is also echoed with the issue of information disclosure and violation by the SFC.

In fact, before the Shenzhen Stock Exchange was also concerned about the letter "hate iron not steel", warning *ST Herman:

At the same time, remind you that the listed company should abide by the laws and regulations of the state, the Listing Rules of the stock market and the guidelines for the standardized operation of the listed companies of small and medium-sized enterprises, etc., be honest, trustworthy, and standardized, and fulfill the obligation of information disclosure in a serious and timely manner.

Enquiry letter reply to dystocia

It is interesting to note that *ST's handling attitude is very "slow" in response to the repeated letters sent by the exchange.

After receiving the letter of concern from the Shenzhen Stock Exchange in April 30th, *ST Herman did not give a reply until May 18th.

After receiving the annual report letter in May 14th, *ST Herman also applied for an extension reply in May 22nd.

*ST said: after receiving the letter of concern, the company immediately organized relevant staff and intermediaries to carry out the implementation of the inquiry letter one by one.

In view of the fact that all parties are conducting verification checks on related matters, it will take time for them to resume their work.

It is not expected that the reply to the above letter of concern will be completed by May 21, 2019.

In order to ensure the authenticity, accuracy and completeness of information disclosure, the company is expected to reply to the letter of concern before May 28, 2019 by applying to the Shenzhen stock exchange.

During the period of delay, the company will continue to actively promote the reply work, complete the reply and fulfill the obligation of information disclosure as soon as possible.

In May 28th, *ST did not wait for the *ST's phase reply. He first received the notice from the SFC.