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Shenzhen Stock Exchange has recently issued public censure for embezzlement to Shanxi Zhendong Pharmaceutical Co., Ltd. (hereinafter referred to as the “Zhengdong”) and Li Anping, the company’s board chairman and de facto controller. Zhendong became the first ChiNext-listed company to receive public censure.
Investigation results indicate that the embezzled fund was returned to Zhendong in April 2012 with no serious consequence caused. However SZSE discovered during ex post annual audit that related parties’ embezzlement had lasted as long as half a year. As a result, SZSE required the company to conduct a special investigation and provide a full account of the amount of embezzled fund and causes of violation. The company’s independent directors, financial advisers and audit firms were also required to issue independent opinions after investigation. It has been exposed in this case that Zhendong and relevant parities lacked sense of conformance, were ill equipped with legal knowledge and unaware of consequences resulting from embezzlement by the controlling shareholder and related parties.
SZSE has been committed to safeguarding an open, fair and impartial market since inception of ChiNext. The exchange spares no effort in fighting irregularities, improving market transparency and maintaining ChiNext’s sound rapid development. A responsible person with SZSE made a special note that it is an inseparable obligation of directors, supervisors and senior management of listed companies to eliminate embezzlement, illegal guarantee and strictly perform the duty of information disclosure. The responsible person also cautioned that each and every listed company and its directors, supervisors and senior management shall draw a lesson from the case, strictly abide by the Securities Law, relevant rules and regulations, voluntarily receive and cooperate with regulation by authorities, eliminate law-violation and non-conforming behaviors and jointly maintain order of the securities market
Being the market organizer and frontline regulator, it is always SZSE’s top priority to protect small and mid-cap investors’ legitimate rights and interests. To this end, SZSE makes consistent efforts in exploring and improving ChiNext’s regulatory model. In April 2012, SZSE issued Standards for Public Censure of Companies Listed on the ChiNext Market, which specifies the conditions for public censure and seeks to optimize the self-regulatory mechanism for disciplinary sanction. SZSE will continue to innovate in disciplinary sanction mechanism and law enforcement system, further enhance the transparency and credibility of disciplinary sanctions and fully protect the legitimate rights and interests of investors, listed companies and other parties concerned.
