In June 2015, Hengbao Co.Ltd(002104) (002104) acquired 51% of the shares of Shenzhen yikayi Technology Co., Ltd. (hereinafter referred to as “yikayi”) in cash of RMB 153 million and became its controlling shareholder. However, on March 31, 2021, Hengbao Co.Ltd(002104) announced that one card is prone to abnormal management, the company has been unable to control the financial and business decisions of one card, and it is easy to lose control of one card.
On the first day of 2022, Yu Jinjin, general manager of Yika Yiyuan, a subsidiary of Hengbao “out of control”, disclosed to the reporter over the phone that on May 17, 2021, Hengbao Co.Ltd(002104) initiated an arbitration application to Shanghai Arbitration Commission on the ground that “one card is easy to lose control and cannot be consolidated”, Apply for arbitration to cancel the share transfer agreement and supplementary agreement signed by Hengbao Co.Ltd(002104) and yikayi and other respondents in May 2015.
Shenzhen yikayi Technology Co., Ltd. (430671) was listed in the National SME share transfer system in April 2014. According to the announcement on the resolution of the second extraordinary general meeting of shareholders in 2021, Yu Jinjin’s position as a director of the company was removed from office from April 20, 2021.
Yu Qianjin told reporters that the Shanghai Arbitration Commission recently issued a notice that due to the needs of the case, it decided to extend the trial period of the case to January 26, 2022. The reporter also learned that the arbitration was held on August 31, 2021 and is currently in the stage of pending award.
In this regard, Hengbao Co.Ltd(002104) Director Secretary Chen Mei Mei told the securities times that one card is easy to get out of control, which has been disclosed by the company in the 2020 annual report, the reply to the inquiry letter of Shenzhen Stock Exchange and the 2021 semi annual report. With regard to arbitration, she said that the company would make continuous disclosure after the final arbitration result came out.
is it reasonable to seek “regret medicine”?
In recent years, the strange phenomenon that A-share listed companies lose control of their holding subsidiaries has been staged frequently.
Regarding Hengbao Co.Ltd(002104) ‘s proposal to terminate the share transfer agreement, Yu Jinjin, general manager of Yika Yiyuan, a holding subsidiary of Hengbao Co.Ltd(002104) , said that all along, according to the rules of the game of share transfer in the capital market, in order to prevent the acquisition purpose from failing, it is usually possible to attach profit bet clauses to the acquisition agreement – for example, the acquiree cannot achieve the goal, It is required to repurchase shares or compensate the acquirer through the second transaction.
The official website of yikayi company disclosed the description of major arbitration involving 166 million between yikayi shareholders Hengbao Co.Ltd(002104) and other shareholders. According to the article, the arbitration applicant Hengbao Co.Ltd(002104) believes that since February 2021, the first, second, third and fourth respondents have repeatedly violated the provisions of the share transfer agreement, obstructed the applicant from exercising the rights of the controlling shareholder, excluded the applicant’s legal supervision over one card trade, and even refused to allow the applicant’s staff to enter one card trade, resulting in the applicant’s easy control over one card and unable to consolidate his performance, The purpose of the contract has completely failed.
In this regard, Yu Qianjin believes that the purpose of the contract for the transfer of shares without gambling terms or performance commitments is, as the name suggests, “one party transfers shares and the other party pays the share transfer fee”. Then, it is obviously an act of inverting cause and effect to push back and explore the original “contract purpose” from the corporate governance a few years later. The share transfer payment reflects the market value or price of the shares, and does not include (or imply) the meaning that the minority shareholders should agree to all decisions and decisions of the major shareholders. In other words, as long as the share transfer agreement is free from fraud, coercion, apparent unfairness and major misunderstanding, violation of mandatory provisions of the law and no agreed reasons for termination, it shall not be terminated at will.
“out of control” or “not out of control”?
On March 31, 2021, Hengbao Co.Ltd(002104) issued the announcement on losing control of Shenzhen yikayi Technology Co., Ltd., announcing the fact of losing control; Subsequently, on April 20, the official website of yikayi company released the article clarifying that Hengbao Co.Ltd(002104) did not lose control of Shenzhen yikayi Technology Co., Ltd.
According to the Hengbao Co.Ltd(002104) announcement at that time, due to the abnormal management situation of one card, in order to strengthen the control of one card, the company sent a working group with the chairman, chief financial officer and legal representative of one card as the main members to one card, but the control work was blocked due to the obstruction of the original management team such as Yu Jinjin, the shareholder of one card; The financial personnel appointed by the company were dismissed without reason; The official seal, financial seal, contract seal, business license and other seals and licenses of yikayi and its subsidiaries are actually controlled by yikayi management team; The management team of yikayi changed the collection method of accounts receivable without authorization and forcibly controlled the financial and business decisions of yikayi and its subsidiaries. In view of the above facts, the company has been unable to control the financial and business decisions of one card easy, can not normally exercise the rights of shareholders and substantially implement control, and the company is easy to lose control of one card.
The audited financial statements of the listed company have little impact on the financial statements of the listed company. At the same time, the audited financial statements of the listed company have little impact on the financial statements of the listed company. The correlation between the main business of one card e-commerce and the existing main business of listed companies is low, which has little impact on the main business of listed companies.
One card easy said that according to the reply of Shenzhen one card easy Technology Co., Ltd. to the inquiry letter of national small and medium-sized enterprise share transfer system Co., Ltd. disclosed by the share transfer system on April 19, 2021, one card easy did not recognize that Hengbao Co.Ltd(002104) lost control of the company. The reasons include that the official seal, financial seal, contract seal, business license and other seals and licenses of yicayi and its subsidiaries are kept and normally used in the company; Hengbao Co.Ltd(002104) control the ukey of one card e-bank voucher preparation and audit, and control the monetary capital of more than 100 million yuan; Hengbao Co.Ltd(002104) be able to exercise shareholders’ rights through the board of directors and the board of supervisors; At present, the financial director of the company is still Huang Honghua designated by Hengbao Co.Ltd(002104) ; At present, the chairman and legal representative of the company are still Huang Honghua designated by Hengbao Co.Ltd(002104) .
In addition, In the reply to The Pacific Securities Co.Ltd(601099) inquiry letter on Shenzhen yikayi Technology Co., Ltd. The Pacific Securities Co.Ltd(601099) disclosed by the share transfer system on April 19, 2021, the sponsor securities company The Pacific Securities Co.Ltd(601099) said: “after verification, Hengbao Co.Ltd(002104) holds 51.1020% of the shares of the listed company and is the controlling shareholder holding more than 50% of the shares of the listed company. According to the company law According to the current effective articles of association of the listed company, the general meeting of shareholders shall make resolutions, ordinary resolutions shall be deliberated and adopted by more than half of the voting rights held by the shareholders attending the meeting, and special resolutions shall be deliberated and adopted by more than two-thirds of the voting rights held by the shareholders attending the meeting, Hengbao Co.Ltd(002104) more than half of the members of the board of directors of the company can be elected through the actual control of the voting rights of the shares of the listed company, and the voting rights of the shares of the listed company can have a significant impact on the resolutions of the general meeting of shareholders of the company. To sum up, the actual controller of the listed company has not changed, and the actual controller is still Qian Jing. ”
Yu Qianjin told reporters that at present, Hengbao Co.Ltd(002104) can control the shareholders’ meeting, board of directors and board of supervisors of yikayi company, exercise the rights of controlling shareholders and have a significant impact on the company. The legal representative, chairman, general manager, Secretary of the board of directors, chairman of the board of supervisors and chief financial officer of yikayi company are appointed by Hengbao Co.Ltd(002104) , and nearly 100 million funds are controlled by Hengbao Co.Ltd(002104) .
In addition, a person familiar with the matter, who asked not to be named, told reporters that at the beginning of 2021, yicayi and Hengbao Co.Ltd(002104) had discussed the adjustment of share proportion or the repurchase of all shares, but it was said that it was not finally done well.
The person said that in most acquisition cases of Listed Companies in China, the controlling shareholders generally do not hand over all the daily operation and management rights of their subsidiaries to the original team, but Hengbao Co.Ltd(002104) agreed in the agreement that “the daily operation is still the responsibility of the original management team”. Therefore, generally speaking, the relationship between the two sides in the first few years was very harmonious.
legal person: regulators attach great importance to the phenomenon of “out of control”
Previously, Fu Changyu, Yi Xiangming and other lawyers of Beijing Zhonglun law firm wrote that there are always various stories at the time node when listed companies disclose their annual reports.
This paper holds that the equity of subsidiaries with control relationship held by listed companies is generally included in the title of “long-term equity investment” in financial reports, which is an important asset of listed companies. Such subsidiaries are “out of control”, the investment income of listed companies may fail, the assets may be damaged, the financial statements need to be adjusted, even the annual report cannot be disclosed on time, and even the business sustainability may cause serious problems, which are highly valued by the regulatory authorities.
“Regulators are mainly concerned about whether the reasons for determining ‘out of control’ are sufficient, whether the information disclosure is true, what countermeasures have been taken before and after out of control, and whether the directors, supervisors and intermediaries are diligent and responsible in the process of ‘out of control’.” Fu Changyu said.
The article points out that “control” and “out of control” are not clear legal concepts, and neither the company law nor the securities law gives a clear definition. However, under the company law, the basic line of “control” can be defined based on the definitions of “controlling shareholder” and “actual controller”. According to Article 216 of the company law, “controlling shareholder” means: (1) holding more than 50% of the shares; Or (2) although the shareholding ratio is less than 50%, its voting rights are enough to have a significant impact on the resolutions of the shareholders’ meeting and the shareholders’ general meeting. The “actual controller” refers to the non shareholders who can actually control the company’s behavior through investment relations, agreements or other arrangements.
Finally, the article holds that although the relevant provisions of the measures for the administration of the acquisition of listed companies and the opinions on the application of securities and Futures Law No. 1 (Zheng Jian FA Zi [2007] No. 15) are mainly aimed at the identification of the “control” of listed companies, based on the consistency of the regulatory system, they can be used as an important reference to judge whether subsidiaries are “out of control”.
(Securities Times)
