On April 2, Xin Jiang Ready Health Industry Co.Ltd(600090) announced that the company’s actual controller, general manager Li Qing and several other directors, supervisors and senior executives planned to increase their holdings of the company’s shares by a total of 3.1 million to 6.2 million shares within 12 months from April 2. However, according to relevant regulations, Dong Jiangao will not increase his holdings in the window period 30 days before the announcement of the company’s annual report from April 1 to April 30. At present, the company faces a variety of delisting risks, and investors may not see the day when the increase plan is implemented in the A-share market.
First, on October 24, 2021, the company received the advance notice of administrative punishment and market prohibition from the CSRC. The company falsely increased its net profit from 2017 to 2019. After deducting the falsely increased net profit, the company’s net profit from 2017 to 2020 was negative for four consecutive years, which may touch the situation of major illegal forced delisting.
Second, because the company’s 2019 and 2020 financial reports were issued with audit reports that could not express opinions, the delisting risk warning was implemented. At present, Xin Jiang Ready Health Industry Co.Ltd(600090) has not hired an annual audit accountant, and the audited annual report of 2021 may not be disclosed as scheduled on April 30, so there is a risk that the company’s shares will be delisted.
Third, as of April 7, the closing price of the company was lower than RMB 1 for 10 consecutive trading days, and there was a risk of being delisted because the closing price was lower than RMB 1 for 20 consecutive trading days.
It should be said that the shareholding increase plan of directors, supervisors and senior managers is like injecting a shot of cardiotonic into the market and plays an immediate role in stopping the decline of stock price. At present, Xin Jiang Ready Health Industry Co.Ltd(600090) stock price is not far from 1 yuan, and there is still room for rescue. This delisting red line may be avoided temporarily.
However, Xin Jiang Ready Health Industry Co.Ltd(600090) may be difficult to avoid the other two delisting red lines, and delisting will have a relatively direct negative impact on the company’s share price. Before delisting, the company’s share price rebounds or fluctuates sharply, which may redistribute the delisting risk among different investors.
According to the regulations, the directors, supervisors and senior management of listed companies shall not buy or sell the shares of the company within 30 days before the announcement of the annual report and semi annual report of listed companies. Therefore, the shareholding increase plan of Xin Jiang Ready Health Industry Co.Ltd(600090) directors, supervisors and senior executives can only be implemented after April 30, but the listing of the company’s shares may be terminated before that. The shareholding increase plan of directors, supervisors and senior managers may be difficult to complete on schedule on the exchange floor, or even just superficial.
The increase of shares held by major shareholders and directors, supervisors and senior managers of listed companies reflects the confidence of industrial capital and management in the operation and development of the company. In order to regulate the increase of shareholders, directors, supervisors and senior managers’ holdings, there are detailed provisions in the guidelines for self discipline supervision of listed companies No. 8 of Shanghai Stock Exchange in 2022, including the requirement to disclose the amount or amount of increase in holdings in the increase announcement. The increase shall be enforceable, and the upper limit of the increase range shall not exceed twice the lower limit, and the lower limit shall not be zero; The uncertainty risks that may be faced by the shareholding increase plan and the countermeasures to be taken shall be disclosed.
In fact, Xin Jiang Ready Health Industry Co.Ltd(600090) in the announcement, it was also disclosed that the capital for the increase was not in place in time, resulting in the risk that the increase plan could not be implemented. Even if the company does not delist, the implementation of the shareholding increase plan is uncertain. Especially critical is that Xin Jiang Ready Health Industry Co.Ltd(600090) once delisted and listed on the new third board, the applicable regulatory rules will change systematically. However, no matter whether the company is delisted or not, the shareholding increase plan (equivalent to the commitment) of the directors, supervisors and senior management of the company shall be implemented according to the contract, which may require the new third board to make connection arrangements with the exchange and improve relevant regulatory systems at the same time.
The objects regulated by the new securities law cover the new third board, and Article 84 stipulates that the letter Phi obligor shall not mislead investors. If the issuer and its controlling shareholders, actual controllers, directors and supervisors fail to fulfill their commitments and cause losses to investors, they shall be liable for compensation according to law. Listed companies disclose the shareholding increase plan (commitment) of Dong Jiangao during the listing period. Even if the company delists to the new third board, if Dong Jiangao does not implement the shareholding increase without reasonable reasons, he may also bear civil liability. Consolidating the civil liability of directors, supervisors and senior executives will help to restrict the behavior of directors, supervisors and senior executives of companies facing delisting who falsely increase their holdings.
