Letter of concern about Misho Ecology & Landscape Co.Ltd(300495)
Gem concern letter [2022] No. 226 Misho Ecology & Landscape Co.Ltd(300495) board of directors:
On April 29, 2022, your company disclosed the annual report and audit report of 2021. On the same day, Jiangsu regulatory bureau of China Securities Regulatory Commission (hereinafter referred to as “Jiangsu securities regulatory bureau”) conducted an annual audit of your company in 2021, including Beijing Zhongtian Huamao Certified Public Accountants (general partnership) (hereinafter referred to as “Zhongtian Huamao”) and the signing certified public accountants Zhang Qing Chang Yuanyuan issued the decision of Jiangsu Securities Regulatory Bureau on ordering Beijing Zhongtian Huamao Certified Public Accountants (general partnership) and Zhang Qing and Chang Yuanyuan to take corrective regulatory measures ([2022] No. 45, hereinafter referred to as the decision on ordering correction). The decision on ordering correction said that before Zhongtian Huamao, Zhang Qing and Chang Yuanyuan issued the 2021 annual audit report and internal control audit report for your company, The project quality reviewer clearly disagrees to issue an unqualified audit report on your company’s financial statements and internal control. When the differences of opinion were not resolved, Zhongtian Huamao issued an unqualified audit report with emphasized items. According to Article 59 of quality control standard No. 5101 – quality control of accounting firms on the audit and review of financial statements, other assurance and related services (2019), the business report can be signed only after the problem is solved. Zhongtian Huamao, Zhang Qing and Chang Yuanyuan do not meet the conditions for issuing the audit report. Jiangsu Securities Regulatory Bureau ordered Zhongtian Huamao, Zhang Qing and Chang Yuanyuan to complete the rectification within 10 days and submit a written rectification report. At the same time, Jiangsu securities regulatory bureau will take further measures according to the rectification. Our department is concerned about this. Please further explain the following issues:
1. On April 29, 2022, the types of audit opinions in the 2021 annual audit report and internal control audit report disclosed by your company are unqualified opinions with emphasized items. According to the decision on ordering correction, the quality reviewer of Zhongtian Huamao project clearly disagreed with issuing an unqualified audit report on your company’s financial statements and internal control, and Zhongtian Huamao did not meet the conditions for issuing an audit report.
(1) Zhongtian Huamao quality reviewers are requested to explain the specific reasons and controversial matters for not agreeing to issue an unqualified audit report on your company’s financial statements and internal control. Please sign accountants Zhang Qing and Chang Yuanyuan to explain the audit procedures and concluding opinions on the controversial matters. Quality reviewers are requested to explain the review procedures and concluding opinions adopted. Please Zhang Qing Chang Yuanyuan and the quality reviewer explained respectively whether the impact of the disputed matters on the financial statements is significant and extensive, and the specific impact on the types of audit opinions in the annual audit report and internal control audit report in 2021. After fully considering the above effects, Zhang Qing, Chang Yuanyuan, quality reviewers and the company are requested to explain whether the company may terminate the listing of shares in the third item of article 10.3.10 “audit report with qualified opinions, unable to express opinions or negative opinions in financial accounting report” of Shenzhen Stock Exchange GEM Listing Rules (revised in December 2020), and make corresponding risk tips.
(2) On April 28, 2022, Zhongtian Huamao issued the special audit report on the effectiveness of internal control over the company’s financial report on December 31, 2021 (hereinafter referred to as the internal control audit report). Zhongtian Huamao’s assurance opinion is that Meishang ecology maintained effective internal control in all major aspects on December 31, 2020 in accordance with the basic norms of enterprise internal control and relevant regulations. Zhongtian Huamao is requested to check the accuracy of the assurance base date in the assurance opinion. If errors are involved, please correct them in time.
(3) According to the internal control audit report, from May 2021 to February 2022, the company’s independent director, chief financial officer, Secretary of the board of directors and securities affairs representative resigned. Wang Yingyan, the company’s actual controller, served as the company’s chairman, general manager, Acting Secretary of the board of directors and Acting financial director at the same time, resulting in the management being above internal control. In July 2021, the 300 million funds returned by Wang Yingyan to the company were transferred out again, and the company’s internal control failed to identify the fund transfer out activities in time. As of December 31, 2021, Wang Yingyan and his related parties had not returned the amount of 306198300 yuan, and the company made full provision for impairment. Based on the above facts, Zhongtian Huamao still believes that the company’s internal control over financial reporting on December 31, 2021 is effective in all major aspects. At the same time, the company corrected the accounting errors in the early financial report four times in 2021, and the company corrected the accounting errors in the early financial report again on April 29, 2022, which is quite different from the four accounting error corrections in 2021. In addition, during the early interview with Zhongtian Huamao, Zhang Qing, the signing accountant, admitted that the company’s internal control related to financial reporting had not changed substantially in 2021. Please explain whether Zhongtian Huamao has obtained sufficient and appropriate audit evidence and evaluated the defects of the company’s internal control on December 31, 2021 in accordance with the audit guidelines for enterprise internal control and the notice on further improving the effectiveness of internal control over financial reports of listed companies issued by the Ministry of Finance and the CSRC, Whether the company has issued appropriate audit opinions on the effectiveness of the design and operation of internal control over the company’s financial report on December 31, 2021.
2. On April 1, 2022, the announcement on receiving the decision of Jiangsu Securities Regulatory Bureau on ordering Beijing Zhongtian Huamao Certified Public Accountants (general partnership) and relevant personnel to take corrective regulatory measures disclosed by your company shows that there are major errors in the risk assessment procedures in the verification reports such as the audit report on the special instructions for correction of Misho Ecology & Landscape Co.Ltd(300495) accounting errors issued by Zhongtian Huamao from June 2021 to November 2021 Further, Jiangsu Securities Regulatory Bureau required Zhongtian Huamao to reissue the relevant assurance report and submit a written rectification report within 30 days. Zhongtian Huamao is requested to explain the rectification and progress, whether the written rectification report, assurance report, working paper and relevant evidence have been submitted as required, whether the written rectification report and relevant assurance report have been accepted by Jiangsu securities regulatory bureau, and the impact of the events involved in the relevant assurance report on the accuracy of the company’s opening data in 2021 and the type of audit report opinions on the company’s financial and accounting report in 2021.
3. On April 29, 2022, the announcement on signing the creditor’s rights exemption agreement disclosed by your company shows that as of April 27, 2022, the principal, interest and unpaid guarantee expenses of the special bond (phase I) (hereinafter referred to as “18 Meishang 01”) of PPP project of Jiangsu Meishang Ecological Landscape Co., Ltd. in 2018 are about 284 million yuan, Meishang Ecological Landscape Co., Ltd. publicly issued corporate bonds (phase I) (hereinafter referred to as “17 Meishang 01”) to qualified investors in 2017, with a total of about 515 million yuan of bond principal, interest and unpaid guarantee fees.
Shenzhen hi tech Investment Group Co., Ltd. (hereinafter referred to as “hi tech investment”) provides joint and several liability guarantee for 18 Meishang 01 and 17 Meishang 01 within the specified guarantee period and scope. After assuming the guarantee liability, hi tech investment has the right of recourse against your company. On April 27, 2022, hi tech investment signed the creditor’s rights exemption agreement with your company and your controlling shareholder Wang Yingyan. After the accelerated maturity of 18 Meishang 01 and 17 Meishang 01 bonds, hi tech investment obtained the creditor’s rights against your company and the people’s court ruled to accept the preconditions for the judicial reorganization of your company, hi tech investment agreed to exempt the above-mentioned creditor’s rights to the extent that Wang Yingyan actually occupied 306177300 yuan of the fund balance of your company. The creditor’s rights exemption agreement shall come into force from the date when the judicial reorganization of your company is accepted by the people’s court. If the listed company receives the decision of the exchange to terminate the listing after the signing of this agreement, the debt exemption commitments and relevant commitments made by hi tech investment based on this Agreement shall be null and void from the beginning.
(1) Please explain whether hi tech investment has obtained the creditor’s rights against your company, whether it has become the legal creditor of your company and whether it has the legal qualification to make debt exemption in combination with the maturity time of 18 Meishang 01 and 17 Meishang 01, the specific conditions for accelerating the maturity of bonds and the relevant procedures to be performed.
(2) There are many preconditions in this creditor’s rights exemption agreement, such as accelerated maturity of bonds, compensation of high-tech investment, the people’s court’s ruling to accept the judicial reorganization of your company, and the company has not received the decision of the exchange to terminate the listing. Please explain the specific effective time point and judgment basis of the creditor’s rights exemption agreement, whether this debt exemption is unconditional, irrevocable and unalterable, whether this debt exemption is still uncertain, and whether your company’s current obligations for relevant liabilities are relieved; At the same time, in combination with the above situation, explain the effective time point of the fund occupation solution and whether there is great uncertainty.
(3) On June 30, 2021, Wang Yingyan, the controlling shareholder and actual controller of your company, returned the company’s 300 million fund occupation. On July 1, 2021, the fund was transferred out again, resulting in Wang Yingyan’s fund occupation of the listed company. However, your company did not disclose the relevant information until January 2022. Please explain the time when your company and Wang Yingyan know that the above funds have been transferred out again, please explain the recovery measures and effects taken for the above funds, and whether your company has effectively protected its own legitimate rights and interests.
(4) According to the provisions of the guidelines for the supervision of listed companies No. 8 – regulatory requirements for capital transactions and external guarantees of listed companies (hereinafter referred to as the “guidelines for the supervision of listed companies No. 8”), the above funds shall be paid off in cash in principle. Please explain whether your company plans to solve the capital occupation of controlling shareholders by means of debt exemption, which complies with the relevant provisions of the No. 8 regulatory guidelines.
Zhongtian Huamao is requested to check and give clear opinions on the above matters, and explain the impact of relevant matters on the types of opinions in the audit report of the financial accounting report of 2021. Independent directors are requested to check the above matters and express clear opinions. Please write to hi tech investment in response to the above questions (1) (2) and disclose the reply of hi tech investment.
Please make a written statement on the above matters, submit the relevant explanatory materials to our department and disclose them to the public before May 5, 2022, and send a copy to the listed company supervision division of Jiangsu securities regulatory bureau. At the same time, remind your company that listed companies must earnestly and timely fulfill the obligation of information disclosure in accordance with national laws and regulations and the Shenzhen Stock Exchange GEM Listing Rules. All members of the board of directors of a listed company must ensure that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions, and bear individual and joint liabilities for their guarantee.
This is to inform you.
Gem company management department April 30, 2022
