On March 2, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) received the supervision work letter on matters related to the suspension and termination of the listing of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) company’s shares (hereinafter referred to as the supervision work letter) issued by the Shanghai Stock Exchange. The supervision work letter said that according to the decision on administrative punishment made by the CSRC, the company falsely increased its operating revenue in 2018 and 2019. After retroactive adjustment, in 2018 In 2019, the operating income of the company was lower than RMB 10 million for two consecutive fiscal years, and the operating income of the company in 2020 was also lower than RMB 10 million, and the accounting firm issued a qualified audit report. The above facts show that the financial indicators from Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) 2018 to 2020 have actually touched the situation of major illegal compulsory delisting stipulated in the original measures for the implementation of major illegal compulsory delisting of listed companies of Shanghai Stock Exchange.
According to the regulatory work letter, the Shanghai Stock Exchange has issued a prior notice of the intention to terminate the listing of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) shares, and will make a decision on the termination of the listing of the company’s shares within the specified time according to the review opinions of the listing committee.
In addition, the Shanghai Stock Exchange suspended the trading of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) company’s shares in accordance with relevant regulations because the company did not issue the announcement of applying for suspension. The trading of the company’s shares has been suspended since March 3, 2022.
At present, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) the latest share price is 1.03 yuan / share, with a total market value of 1.5 billion yuan. According to wind data, as of the end of the third quarter of last year, the number of shareholders of the company was 24087. In January this year, the company’s share price fell continuously, falling below the face value and once fell to 0.88 yuan / share, becoming a “Fairy” share.
Analysts believe that Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) major illegal compulsory delisting reflects the determination of the regulatory authorities to resolutely implement the new delisting regulations and “zero tolerance” for financial fraud, which will become another landmark event to unblock the “export customs” after the reform of the delisting system.
financial fraud has clear facts, bad means and serious consequences
On the same day, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) also issued an announcement to disclose the receipt of the decision on administrative punishment and the decision on banning market entry by the CSRC.
According to the decision on administrative punishment, there are false records in the annual reports of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) 2018 and 2019, including falsely increasing the operating revenue of RMB 133854 million and the total profit of RMB 1.2911 million in 2018, accounting for 100% of the operating revenue disclosed in the current year and 5.24% of the absolute value of the total profit;; Falsely increased the operating revenue of 5.7236 million yuan, non operating revenue of 75.9 million yuan and total profit of 792482 million yuan in 2019, accounting for 55.13% and 253.78% of the disclosed operating revenue and total profit of the current year respectively.
The decision on administrative punishment shows that Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) counterfeiting means are extremely bad. In 2018, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) signed an iron concentrate sales contract with Axin commerce and trade, and signed an iron concentrate purchase contract with Sibei investment on the same day. Based on this, the company recognized an operating revenue of 133854 million yuan. The actual controller of Axin commerce and trade and the shareholder of Sibei investment are he, a good friend of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) actual controller Huang Wei.
It is verified by the CSRC that the company has not obtained the control right of relevant commodities in the process of trade business, and the relevant funds form a closed loop among the company, suppliers and customers. The relevant sales contracts do not have commercial substance and do not meet the conditions for revenue recognition in the accounting standards. In 2019, the company signed a sales contract with Mr. He’s Axin trading and Sibei investment again, falsely increasing the operating revenue by 2.2166 million yuan. In addition, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) in 2019, a new way of counterfeiting was added, and the property management income of 2.297 million yuan was recognized through sun company dingshengyuan under the condition that it did not actually provide property management services, did not confirm the cost of property services, and did not actually obtain cash inflow. Even during the audit in 2020, the company also signed a rent credit agreement with the relevant parties, falsely increasing the operating income by 1.3 million yuan when the relevant parties did not actually lease the real estate, manage the sublease or receive the Sublease Rent, and the relevant debts were not offset.
Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) after deducting the inflated operating income, the operating income in 2018 and 2019 was less than 10 million yuan for two consecutive years. Combined with the company’s operating income of 3.4587 million yuan in 2020, the company’s actual operating income was less than 10 million yuan for three consecutive years from 2018 to 2020, which has touched on major illegal delisting.
In addition, the decision on administrative punishment also shows that in addition to false records, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) there are also major omissions. It was found that on May 24, 2020, Han Zhenyuan and Kashgar Natural Resources Bureau signed the Kashgar open source market land planning adjustment and development agreement (hereinafter referred to as the adjustment and development agreement), which agreed to plan, adjust and redevelop the Kashgar open source market. The total assets of Kashgar open source market involved in the agreement are 803.58 million yuan, accounting for 72.36% of the total assets of the listed company in the latest audit. According to the adjustment and development agreement, if Han Zhenyuan has not been demolished before August 24, 2020, it will be deemed that Han Zhenyuan has abandoned the development, and Kashgar Natural Resources Bureau will recover the land use right. If Han Zhenyuan’s original property right certificate has gone through the mortgage formalities, the mortgage formalities should be handled within July 20, 2020 Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) did not disclose the matter in time.
Long term financial problems
Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) main business has weak sustainable operation ability and poor standardized operation. In recent years, the audit opinions of the company’s annual reports over the years are non-standard opinions such as qualified opinions. Accountants have questioned the authenticity of the company’s income, the occupation of funds by related parties, the ability of sustainable operation and other matters. Since 2015, the company and relevant responsible persons have been administratively punished by the CSRC for 3 times and disciplined by the Shanghai stock exchange for 5 times. Violations include failure to disclose regular reports such as 2018 and 2019 annual reports within the statutory time limit, and non disclosure of major issues such as major debts, related party transactions and related party guarantees.
At present, Huang Wei, the actual controller of the company, has been banned from the market. Tacheng Public Security Bureau has filed a case for investigation on the crime of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) , Huang Wei suspected of illegal disclosure and non disclosure of important information.
Looking through ST’s early new announcement, we can find that the authenticity of the company’s income has long been suspicious. First, in 2018 and 2019, the operating revenue disclosed by the company was slightly more than 10 million, which just met the needs of shell protection.
At the same time, the audit opinion showed that the audit opinion of the company’s 2018 annual report was “unable to express an opinion”, involving many accounting subjects of the company. Subsequently, the company hired Shenzhen Tangtang accounting firm, and the audit opinion in 2019 and 2020 became a qualified opinion accordingly.
Judging from the fact that Shenzhen Tangtang was subsequently inspected by the CSRC and found many practice problems, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) financial fraud and purchase of audit opinions seem to have foreboding. In this regard, the Shanghai Stock Exchange has paid close attention to it for a long time and frequently sent letters to inquire about the company. From the sorting of the announcement, since 2018, the exchange has sent about 50 inquiry letters to the company, including about 10 inquiry letters on the post audit of periodic reports, which have repeatedly reminded the market that there are significant risks in the authenticity of the company’s business and capital transactions.
there are 15 trading days left for delisting and consolidation
In fact, the relevant “delisting alarm” in the early stage of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) has sounded as many as 18 times. Up to now, investors who have not yet exited still have 15 trading days of delisting and consolidation trading opportunities.
On October 23, 2021, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) disclosed that it had received the notice in advance of administrative punishment. According to the advance notice, the company may have a major illegal delisting with an operating income of less than 10 million yuan in three years. Since then, according to the relevant provisions of the stock listing rules, the company disclosed a risk warning announcement of “possible termination of listing in case of major illegal compulsory delisting” every five trading days. As of February 26, 2022, the company has disclosed 18 delisting risk warning announcements.
The reporter found that Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) shares should be suspended when receiving the administrative punishment decision, and the exchange will make a decision to terminate the listing in accordance with the regulations. Since then, for investors who need to exit before delisting, the rules give 15 trading days of delisting and consolidation period trading opportunities, and the delisting will be officially delisted at the expiration of the period.
another case of major illegal delisting, and the crackdown on financial fraud
In July 2021, the general office of the CPC Central Committee and the general office of the State Council issued the opinions on strictly cracking down on illegal securities activities according to law, which clearly pointed out that illegal acts such as false statements and financial fraud should be investigated and dealt with strictly, quickly and severely according to law.
In this regard, relevant industry insiders believe that the administrative punishment of Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) once again demonstrates the CSRC’s firm attitude of “zero tolerance” against financial fraud, and is of great significance to optimize the allocation of resources and protect the legitimate rights and interests of investors.
As early as November 2018, the Shanghai and Shenzhen Stock Exchange issued the measures for the implementation of major illegal compulsory delisting of listed companies, which defined four major illegal delisting situations: fraudulent issuance of initial public offering, fraudulent issuance of reorganization listing, fraud of annual report to avoid delisting and other situations recognized by the exchange. Subsequently, in the delisting system reform in 2020, the delisting standard of “amount of fraud + proportion of fraud” was added on the premise of retaining the original major illegal delisting standard. The major illegal delisting rule system is becoming more and more mature, and the regulatory signal to crack down on financial fraud is very obvious.
The market participants interviewed told reporters that in this context, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) still committed crimes against the wind, trying to increase the operating income by constructing businesses such as trade, leasing and property management and avoid financial delisting indicators. The above-mentioned illegal acts of financial fraud have seriously disturbed the market order and damaged the rights and interests of investors.
Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) was delisted in violation of major laws, which fully demonstrates the determination of the regulatory authorities to implement the policy of “building a system, non intervention and zero tolerance”, firmly maintain the seriousness and authoritative regulatory attitude of the delisting system, and “retreat as much as possible” for companies that seriously disrupt the market order and touch the delisting situation. In the future, it is bound to continue to smooth the “export” of the market, promote the formation of a market mechanism for the survival of the fittest, promote the improvement of the quality of listed companies, effectively protect the legitimate rights and interests of investors, and maintain an open, fair and just market order.
investors can claim shareholders’ rights legally and rationally
It should be noted that the current system of China’s capital market also provides many ways to protect the rights of small and medium-sized investors.
First, shareholders can take measures to safeguard shareholders’ rights according to the actual situation. If the company has illegal information disclosure such as false statements, and investors suffer losses, they can seek civil relief or compensation through judicial channels on the grounds that they have been infringed by false statements.
Second, in case of disputes between investors and listed companies, they can apply to investor protection institutions for mediation; Or when filing securities civil compensation litigation such as false statements, the investor protection institution may be entrusted to participate in the litigation as a representative.
Third, even after the termination of listing, the shareholders of the company can still exercise their rights according to law. After the company’s listing is terminated, although its shares are not traded on the Shanghai stock exchange market, its assets, liabilities, operations, profits and losses and other situations do not change accordingly. According to the provisions of the company law, after the termination of listing, the shareholders of the company still enjoy the rights of shareholders such as the right to know the company and the right to vote, and the rights enjoyed by shareholders will not change. After the listing is terminated, the shareholders of the company can still transfer their shares in accordance with the provisions.
