Stock Code: Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) stock abbreviation: ST Chengxing No.: pro 2022050 Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) reply to some questions of the inquiry letter on matters related to the judicial auction of shares held by ST Chengxing shareholders issued by Shanghai Stock Exchange
Important contents and risk tips:
● on May 6, 2021, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) (hereinafter referred to as “Chengxing Co., Ltd.”, “the company” or “listed company”) was given a negative internal control audit report by Suya Jincheng Certified Public Accountants (special general partnership) (hereinafter referred to as “Suya Jincheng”) in 2020, And due to the failure to solve the problem of the occupation of funds by the controlling shareholders and their related parties, the company’s shares are subject to other risk warnings; Secondly, the audited ending net assets of the company in 2020 were negative, and the financial and accounting report of 2020 was issued, which could not express opinions, and the delisting risk warning of the company’s shares was implemented. In view of the fact that the company also triggered relevant provisions such as the Listing Rules of Shanghai Stock Exchange, the company’s shares have been warned of delisting risk. According to article 9.3.11 of the Listing Rules of Shanghai Stock Exchange (revised in January 2022), if the company’s 2021 annual report touches any of the delisting related indicators, the listing of the company’s shares will be terminated.
● on November 9, 2021, the creditor of the company, Jiangyin building decoration products factory, filed an application for bankruptcy reorganization of the company with Wuxi intermediate people’s Court (hereinafter referred to as the “court”) on the ground that the company could not pay off its due debts and its assets were insufficient to pay off all debts. At present, the company has not received the ruling of the court on the applicant’s application for company reorganization, There are still major uncertainties whether the applicant’s application can be accepted by the court and whether the company enters the bankruptcy reorganization procedure. If the court formally accepts the reorganization application of the company, the company will be at risk of being declared bankrupt due to the failure of reorganization. If the company is declared bankrupt, the listing of the company’s shares will be terminated according to article 9.4.13 of the stock listing rules of Shanghai Stock Exchange (revised in January 2022).
● on December 7, 2021, the company and Chengxing group received the notice of filing a case from the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) on the same day. Due to the suspected violation of laws and regulations on information disclosure, the CSRC decided to punish the company and Chengxing group in accordance with the securities law of the people’s Republic of China, the administrative punishment law of the people’s Republic of China and other laws and regulations Chengxing group filed a case. Up to now, the company and Chengxing group are actively cooperating with the CSRC in filing the case.
● on February 8, 2022, Jiangyin regional headquarters economic Park Development and Investment Co., Ltd. (hereinafter referred to as “headquarters economic Park”) applied to Jiangyin court for reorganization of Chengxing group, the controlling shareholder of the company. On February 9, 2022, the company received a notification letter from Chengxing group, saying that the above reorganization application has been accepted by the court and Jiangsu mousheng law firm has been appointed as the manager of Chengxing group. Chengxing group entered the reorganization procedure, which may have an impact on the equity structure of the company. The company and Chengxing group remain independent in terms of business, personnel, assets, institutions and finance. Chengxing group’s entry into the reorganization process will not have an impact on the company’s daily production and operation. There is still uncertainty about the success of Chengxing group’s subsequent reorganization.
Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) (hereinafter referred to as “the company” or “the company” or “Chengxing shares”) received the inquiry letter on matters related to the judicial auction of shares held by ST Chengxing shareholders (szgh [2021] No. 2998) (hereinafter referred to as “the inquiry letter”) from Shanghai Stock Exchange on December 16, 2021. See announcement Pro 2021118 for details. On December 24, 2021, December 31, 2021, January 8, 2022, January 15, 2022, January 22, 2022, January 29, 2022, February 12, 2022, February 19, 2022 On February 26, 2022, relevant announcements on delaying the reply to the inquiry letter were disclosed (see the announcements: pro 2021121, pro 2021124, pro 2022001, pro 2022004, pro 2022009, pro 2022011, pro 2022022, pro 2022037 and pro 2022043). After receiving the inquiry letter, the company actively organizes relevant parties and intermediaries to implement the questions raised in the inquiry letter one by one. As of the date of this announcement, the company still needs to further verify question 2 (2), question 4 (1), question 3, question 4 and question 6 in the inquiry letter, and fulfill the obligation of information disclosure in time after the verification is clear.
The reply to the inquiry letter is hereby announced as follows:
1、 According to the announcement, the shares held by Hanying investment and Chengxing group will be successively auctioned by the judiciary. The company and its controlling shareholders have been filed for investigation by the CSRC on December 7, 2021 on suspicion of illegal information disclosure. According to paragraph 2 of Article 36 of the securities law, the shareholders, actual controllers, directors, supervisors and senior managers of a listed company holding more than 5% of the shares, as well as other shareholders holding the shares issued by the issuer before the initial public offering or the shares issued by the listed company to specific objects, who transfer their shares of the company, shall not violate the law Administrative regulations and the provisions of the securities regulatory authority under the State Council on holding period, selling time, selling quantity, selling method, information disclosure, etc., and shall abide by the business rules of the stock exchange. According to Article 6 of Several Provisions on the reduction of shares held by shareholders and directors, supervisors and senior managers of listed companies issued by the CSRC, major shareholders of listed companies shall not reduce their shares during the period of investigation by the CSRC because they are suspected of securities and Futures Crimes. At the same time, according to Article 4, the reduction of shares due to judicial enforcement shall be handled in accordance with the above provisions. The company and the above two shareholders are requested to verify: (1) whether the reduction of shares through judicial auction violates the securities law and other relevant laws and rules. If there are violations, please rectify them according to law and regulations as soon as possible; (2) Whether there is any collusion between the applicant and the respondent of judicial auction to circumvent the reduction provisions. Please hire a lawyer to express your opinions.
reply:
(I) whether the reduction of shares through judicial auction violates the securities law and other relevant laws and rules. If there are violations, please rectify them as soon as possible in accordance with the law and regulations
1. The company’s shares held by Jiangyin Hanying Investment Co., Ltd. (hereinafter referred to as “Hanying investment”) were auctioned by the judiciary
On November 24, 2021, Jiangyin people’s Court of Jiangsu Province (hereinafter referred to as “Jiangyin court”) made an execution ruling (2021) Su 0281 No. 6321, ruling to auction and sell off 106107921 shares of Chengxing shares (pledge registration No.: zyd181388) owned by Hanying investment.
106107921 shares of the company held by Hanying investment were publicly auctioned and sold on Alibaba judicial auction network platform. The first judicial auction was held from 10:00 on December 26, 2021 to 10:00 on December 27, 2021 (except for delay). Because there was no bidder to bid, the first judicial auction was closed. The second judicial auction was held from 10:00 on January 13, 2022 to 10:00 on January 14, 2022 (except for delay). Because there was no bidder to bid, the second judicial auction was closed. The company’s shares held by Hanying investment will be sold publicly during the 60 day sale period (except for delay) from 10:00 on January 30, 2022. As of March 3, 2022, no bidder has signed up for public sale on Alibaba judicial auction network platform.
2. The company’s shares held by Jiangyin Chengxing Industrial Group Co., Ltd. (hereinafter referred to as “Chengxing group”) were auctioned by judicial auction
On December 7, 2021, Jiangyin court made an execution ruling (2021) Su 0281 No. 7087, ruling to auction and sell off 25.78% of the shares of the company held by the executee Chengxing group (securities code: Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) , a total of 170826693 shares).
170826693 shares of the company held by Chengxing group were publicly auctioned on Alibaba judicial auction network platform. The first judicial auction was held from 10:00 on January 13, 2022 to 10:00 on January 14, 2022 (except for delay). Because there was no bidder to bid, the first judicial auction was closed. Second judicial
The auction was held from 10:00 on February 14, 2022 to 10:00 on February 15, 2022 (except for delay). Because there was no bidder to bid, the second judicial auction was closed.
On February 8, 2022, Jiangyin court made (2022) su0281 Boshen No. 5 civil ruling and (2022) su0281 Boshen No. 2 decision, ruled to accept the reorganization application of Jiangyin regional headquarters economic Park Development and Investment Co., Ltd. (hereinafter referred to as “headquarters economic Park Company”) against Chengxing group, and appointed Jiangsu mousheng law firm as the manager of Chengxing group. On February 10, 2022, the company issued the announcement on the court ruling to accept the reorganization of controlling shareholders (Announcement No.: 2022020). Article 19 of the enterprise bankruptcy law of the people’s Republic of China (hereinafter referred to as the “enterprise bankruptcy law”) stipulates that after the people’s court accepts the bankruptcy application, the preservation measures related to the debtor’s property shall be lifted and the execution procedure shall be suspended.
3. The company and Chengxing group were filed for investigation by the CSRC
On December 7, 2021, the company received the notice of filing a case (Zheng Jian Li Jian Li Jian Zi No. 0372021080) from the China Securities Regulatory Commission, and Chengxing group received the notice of filing a case (Zheng Jian Li Jian Li Jian Zi No. 0372021081) from the China Securities Regulatory Commission. Due to suspected illegal information disclosure, according to the securities law of the people’s Republic of China (hereinafter referred to as the “Securities Law”) The CSRC decided to file a case against the company and Chengxing group in accordance with the administrative punishment law of the people’s Republic of China and other laws and regulations.
4. Verification of whether the reduction of shares by judicial auction violates the securities law and other relevant laws and rules
According to paragraph 2 of Article 36 of the securities law, the shareholders, actual controllers, directors, supervisors and senior managers of a listed company holding more than 5% of the shares, as well as other shareholders holding the shares issued by the issuer before the initial public offering or the shares issued by the listed company to specific objects, who transfer their shares of the company, shall not violate the law Administrative regulations and the provisions of the securities regulatory authority under the State Council on holding period, selling time, selling quantity, selling method, information disclosure, etc., and shall abide by the business rules of the stock exchange. According to Article 6 of Several Provisions on the reduction of shares held by shareholders and directors, supervisors and senior managers of listed companies, major shareholders of listed companies shall not reduce their shares during the period when they are placed on file for investigation by the CSRC or judicial organs due to their suspicion of securities and Futures Crimes. At the same time, according to Article 4 of the provisions on the reduction of shares held by shareholders, directors, supervisors and senior executives of listed companies, the reduction of shares due to judicial enforcement shall be handled in accordance with the above provisions.
According to Article 249 of the Civil Procedure Law of the people’s Republic of China, if the person subjected to execution fails to perform the obligations specified in the legal document according to the execution notice, the people’s court has the right to seize, freeze, allocate or change the price of the person’s property according to different circumstances. In the above two cases, the applicant for enforcement applied to the court for enforcement according to the legally effective civil judgment, and the person subjected to enforcement failed to perform the obligations specified in the legal documents according to the court’s enforcement notice. Therefore, Jiangyin court ruled to auction and sell off the shares of the company held by Chengxing group and Hanying investment, and conduct judicial auction and sale.
The judicial auction and sale of the shares of the company held by Chengxing group and Hanying investment is due to the compulsory execution of the court according to the effective legal documents. These shareholders do not actively transfer their shares of the company, and these shareholders, as the executee, cannot resist the compulsory execution of the court. The company and Chengxing group are currently being investigated by China Securities Regulatory Commission for suspected illegal information disclosure. If the shares of the company held by major shareholders Chengxing group and Hanying investment are finally sold by judicial auction, such major shareholders will no longer hold the shares of the company, This will lead to a conflict with the provisions of the above provisions on the reduction of shares held by shareholders, directors, supervisors and senior executives of listed companies.
(II) whether there is any collusion between the applicant and the respondent of judicial auction to evade the reduction provisions
Han long, manager of credit management department of Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch (hereinafter referred to as ” Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch”), explained: this judicial auction is based on the execution case between the applicant Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch and the Executees Chengxing group, Runxin phosphorus industry and Hanying investment. As the person subjected to execution failed to perform his obligations in accordance with the contents of the effective civil judgment (2021) su02 minchu No. 157, Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch applied to the court for compulsory execution in accordance with the law in order to realize the creditor’s rights Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch is a branch of a state-owned listed company, and there is no case of conspiring with the executee to evade the reduction provisions.
The administrator of Chengxing group explained: according to Article 19 of the enterprise bankruptcy law, after the people’s court accepts the bankruptcy application, the preservation measures related to the debtor’s property shall be lifted and the execution procedure shall be suspended. The subsequent manager will send the notice of suspension of execution to Jiangyin court and connect with Jiangyin Court on matters related to the suspension of execution of Chengxing group in the execution case (2021) su0281 No. 6321. So far, the notice of suspension of execution has not been received from Jiangyin court.
Hanying investment issued a written confirmation: the 106107921 shares of the company held by Hanying investment were publicly auctioned by Jiangyin court, which is the execution of the lawsuit dispute case between Hanying investment and Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch. The creditor’s right and debt relationship corresponding to the above case is true, and the applicant for execution Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch applied for auction of shares in order to meet the needs of its claimed creditor’s rights, There is no collusion between Hanying investment and Industrial And Commercial Bank Of China Limited(601398) Jiangyin sub branch to evade the reduction provisions.
Chengxing group issued a written confirmation: 170826693 shares of the company held by Chengxing group were held by Jiangyin court
