The Shenzhen Stock Exchange Issued A Letter Of Concern Asking Busen To Explain The Related Matters.

3 months, 6 regulatory letters.

In the early morning of August 28th, the Shenzhen stock exchange sent a letter of concern to *ST Busen, asking the company to explain whether it was compliance with the statement issued by the self operated media, the basis for questioning the shareholders' qualifications for the acquisition of Dongzheng Heng Zheng, the latest progress in the violation of guarantee related matters, the performance of the chairman Zhao Chunxia and the related influence of his "love investment" platform.

*ST Busen's management "inner struggle" has extended from the daily management decisions to the board seats competition, and then to the "public opinion war". Behind the escalation of the "power grab" is the company's three years of turmoil and the loss of its performance. Now that the shell has lit up countdown, and when the chaos of the company is still unknown.

　　 Micro-blog shareholders

After several "offensive and defensive battles" failed by the board of directors, the two sides began the "debate" that you came to me.

In August 22nd, *ST Busen launched its voice through the media such as WeChat and micro-blog, which operated its own business. Recently, the media responded to the report that "the current board of directors has not made a contribution in business and the loss of the company has been alerted".

The statement was "clear" and the company was put on the market risk warning. It was caused by Xu Maodong, the former actual controller, who violating external guarantee and the company's losses for two consecutive years. The statement said that 2017 of the company's losses occurred during the last session of the board of directors, while the 2018 loss is due to accrued and litigation. In contrast, the new board of directors has "spared no effort" in avoiding major risks in the production and operation of the company. Since taking office last March, it has improved the business situation of garment business and actively respondent by promoting measures such as cooperation with Jingdong.

Regulation will pay more attention to the impact of litigation itself. The latest letter of concern from the Shenzhen stock exchange requires the company to add specific measures and the current progress in handling the above violations.

What is striking is that in the statement, "a case of" revocation of business license in the past three years in Dongfang Heng Zheng ", and the lack of detailed disclosure of the source of funds for obtaining 16% of the shares, which itself is the doubt of the qualification of the acquirer of the listed company, is highlighted in bold ways.

According to the announcement, Dongfang Heng Zheng had won 16% of the shares of *ST Busen by the highest price of 284 million yuan through judicial auction, becoming the largest shareholder of the company. Zhao Chunxia, who owns 13.86% of the company's assets, became the second largest shareholder, but still held the board. The company believes that there are no shareholders who can actually control more than 30% of the voting power. Therefore, the real controller has not changed, and there is no risk of contention for control right.

The fact is that the change in equity relations has quickly triggered a new round of competition for corporate control. In June this year, a total of 14.7% shareholders, such as Busen group, Meng Xianglong and 5 shareholders, were invited to convene a temporary shareholders' meeting to request the removal of many directors, including Zhao Chunxia, chairman of the board.

Subsequently, the new large shareholder Dongzheng Heng submitted a motion to re elect directors and supervisors to the company, nominated Wang Chunjiang and other 6 people as the fifth independent directors of the Fifth Board of directors, and nominated Deng Da Feng and other 2 supervisors. The two proposals were not released by the board.

In August 26th, Dongheng Heng wanted to bypass the board of directors and directly asked the board of supervisors to amend the articles of association and to nominate an independent director. However, on the grounds of "causing conflicts in the articles of association", the board of supervisors also rejected the request to submit it to the shareholders' meeting for deliberation.

In the face of the fierce attack of shareholders such as orient Heng Zheng and other shareholders, the current board of directors is determined to speak in a statement. In a statement issued on 22 th, he said that as a listed company's acquirer, there was a disqualification of the main body of the company, and the sharp question was: "what is the purpose of a company holding only 16% of the shareholders without communicating with the current board of directors and how to ensure the reverse of the business dilemma?"

Regarding this, the letter of concern issued by the Shenzhen Stock Exchange on the 28 day requires the company to explain the source and effectiveness of the information, and asks Dongfang Heng Zheng to verify and prove whether there has been any cancellation of the business license and other administrative penalties in the past three years, and whether it meets the requirements of acquiring the listed company.

A sharp and clear statement was released through public channels such as micro-blog, WeChat and other companies, and the two sides' "war" was further burned to the public opinion field. However, it is still questionable whether such a "non public announcement" is compliant. The letter of concern asks: is the company issuing a statement through the self operated media meeting the relevant provisions of the listing rules? Is there still a disclosure of undisclosed matters?

　　 Delisting alarm bell ringing

Shouting in space is a helpless move. In fact, a major focus of the contradiction is where exactly is the real controller Zhao Chunxia?

On the evening of August 19th, in response to the letter from the Shenzhen Stock Exchange, many shareholders of Busen group, Chongqing Xin Sanwei and Zhang Xingliang said: "the board of directors led by Zhao Chunxia is unable to reverse the deterioration of the operation of the listed companies, and Zhao Chunxia himself runs away."

Zhao Chunxia, who is accused of "running away", is a more widely known investor who loves investment in the P2P platform. Since the second half of last year, the love investment platform has been overdue. Platform official website shows that the number of overdue investments in love investment has exceeded 10 thousand, and the overdue amount exceeds 11 billion 100 million yuan. According to the information disclosure system of China mutual Gold Association, the overdue rate of love investment projects is as high as 87.88%.

Coincidentally, Zhao Chunxia had already "escaped" abroad before his "P2P platform" exploded, so that he had repeatedly interviewed the Zhejiang securities regulatory bureau.

In June 13th and June 17th, the Zhejiang Securities Regulatory Commission and the Shenzhen stock exchange sent the regulatory inquiry letter and letter of concern to *ST Busen respectively, asking the company to verify the authenticity of the investigation of love investment and to explain whether Zhao Chunxia was leaving the country or not.

In reply, the company said that Zhao Chunxia was receiving treatment outside the country because of his health reasons, and had no fixed residence. He failed to participate in the talks in person, but maintained regular and timely communication with the regulator of the SFC. In addition, Zhao Chunxia insisted on attending meetings of the board of directors and the company's management and management meetings through telephone meetings, personally approving matters requiring approval from the chairman in the production and operation process, and performing his duties normally. As of the date of announcement, AI investment platform has not been investigated by public security organs.

However, for a few months, *ST Busen did not "expect" the real controller Zhao Chunxia. In the letter of concern issued by the Shenzhen Stock Exchange in August 28th, Zhao Chunxia once again asked about the recent performance of his duties and whether the investment platform would affect the company.

On the one hand, there is a continuous struggle at the top of the company and one side is the crisis of the company's delisting. In April 30th this year, the company was dealt with a "delisting risk warning" because of net profit from two consecutive accounting years in 2017 and 2018.

The semi annual report disclosed by *ST Busen on the evening of 27 shows that although the company's first half loss has narrowed, it has failed to turn around the deficit. During the reporting period, the company achieved a revenue of 181 million yuan, an increase of 4.35% over the same period last year, and realized a net profit of -431.68 million yuan, an increase of 66.11% over the same period last year.

The confusion of the company's internal control is also evident from its shareholders' violation.

In July 11th, *ST Busen received a letter from the Shenzhen Stock Exchange. It said that during the period from June 2018 to July, the controlling shareholder of the company saw 2 million 900 thousand of the non operating capital occupied by the technology, which had violated the relevant regulations. Supervision requires the company to put forward rectification measures in time and disclose it to prevent further offense.

"*ST Busen is getting closer and closer to the final time limit. In the first half of the year, the deficit situation has not been curbed, and the pressure behind earnings will be great. In addition, management is still fighting for power, which is quite unfavorable for the company to improve its operations and turn losses into profits. " A private person in Zhejiang said to the Shanghai Securities Journal.

There's not much time left for *ST Busen.