Kerid Crisis: 600 Thousand Penalties For Three Subsidiaries Unable To Exercise Shareholder Rights

The risk of delisting is very high. Kerid's situation is worse.

In July 18th, Kai Reed announced that he had received the advance notice of administrative penalty from the SFC (punishment No. 2019 [89]).

According to the SFC, Kai Reed did not disclose major acts in a timely manner, violating the provisions of the sixty-seventh, second and tenth provisions of the securities law of the People's Republic of China (hereinafter referred to as the "Securities Law"), which constituted the violation of the law in the 193rd paragraph 1 of the securities law. In the annual report of 2015 and the semi annual report of 2016, Kerid did not disclose the major litigation activities truthfully, violating the sixty-third provisions of the securities law, and constituted the illegal acts described in the first section of article 193rd of the securities law.

Therefore, the SFC decided to give a warning to Kay Reed and impose a fine of 600 thousand yuan. In addition, the SFC also warned the relevant personnel of the incident and imposed a fine of different amounts.

The Beijing News reporter learned that Kerid's net profit from auditing in two fiscal years in 2017 and 2018 was negative. Kerid's audited net assets at the end of the year were negative. At the same time, the CPA firm (special general partnership) issued an audit report which could not express its opinion on Kai Reed's 2018 financial report. Therefore, Kai Reed's stock was specially handled in May 6, 2019 from the "delisting risk warning", and the stock was changed from "Kai Reed" to "*ST Carey" for short.

Kerid's stock was put into effect in the "delisting risk warning". Shortly after that, the turnover of executives left inside the listed companies.

In May 30th, the board of directors of Kay Reed received 4 written resignations from the chairman of the listed company, Sun Jun, director and deputy general manager and Secretary of the board of directors Zhang Bin, director and deputy general manager and chief financial officer Liu Shuyan, and securities affairs representative Liu Ning. Among them, Zhang Bin and Liu Shu Yan resigned, will continue to work in Kay Reed, but no longer serve as executive executives of the company.

In June 20th, Zhang Linjian, director of independent director Reed, submitted a written resignation report to the board of directors. "Zhang Linjian resigned from the seventh board of directors of the company for personal reasons, and all his duties related to the special committees of the company's board of directors. Mr. Zhang Linjian will no longer hold any post in the company after his resignation. "

In July 15th, Kay Reed released the 2019 semi annual performance notice amendment notice. It is estimated that the net profit attributable to shareholders of listed companies is 10 million yuan to 22 million yuan.

There is one detail in this short notice of amendment, which is worth noting. Kay Reed said: "the management of the company is communicating with its subsidiary company, Beijing, from data limited, Tianjin de cotton Mining Co., Ltd. and Beijing Sheng Heng Heng Technology Co., Ltd. to check the relevant financial information. At present, the company's management of the above subsidiary companies is unable to exercise the rights of shareholders. It is not ruled out that further legal measures should be taken to protect the shareholders' rights of the company. Therefore, this earnings announcement does not include the net profit of the three subsidiaries."

The Beijing News reporter learned from Kay Reed's 2018 annual report that Kay Reed's main business income in 2018 came mainly from its subsidiary, Beijing Erli data limited.