Produced | Sohu Finance

Author | Tianlun Chen

A few days ago, WuXi AppTec, the leader of CRO, broke a big thunder, and its shareholders illegally reduced their holdings to cash out by nearly 3 billion, which aroused public outrage among shareholders.

On the evening of June 11, WuXi AppTec issued an announcement regarding shareholders’ violation of their commitments to reduce their shareholding in the company and an apology through the company. From May 14th to June 8th this year, the company’s shareholder Shanghai Yingyi Investment Center (hereinafter referred to as “Shanghai Yingyi”) reduced its holdings by approximately 17,249,700 shares, accounting for 0.6962% of the company’s total share capital. The price range for the reduction is From 143.49 yuan/share to 176.88 yuan/share, the total amount of reduction is 2.894 billion yuan.

After the reduction, as of the announcement date, Shanghai Yingyi only held 4,174,600 shares of WuXi AppTec, accounting for approximately 0.1419% of the total share capital.

Since May 10 this year, WuXi AppTec’s stock price has continued to rise, from 140.31 yuan/share (without restoring rights) to 180.99 yuan/share (without restoring rights), an increase of nearly 30%. The reduction of Shanghai Yingyi happened during the period when the stock price soared.

Before the implementation of this reduction, as a delegated voter, Shanghai Yingyi did not notify WuXi AppTec in advance, nor did it disclose relevant procedures such as the announcement of the implementation of the reduction plan through the company 15 trading days in advance.

WuXi AppTec said that after the company obtained the latest shareholder register sent by China Securities Depository and Clearing Co., Ltd. on June 8 due to the implementation of the 2020 equity distribution, it noticed the change in the number of shares held by Shanghai Yingyi and immediately approved the issue. Check with Shanghai Yingyi by letter and telephone inquiry and remind the relevant rules and the commitments it has made.

The feedback given by Shanghai Yingyi was that before the reduction, Shanghai Yingyi’s shareholding accounted for 0.8381% of the company’s total share capital, which was less than 1% of the total share capital. When the A-shares were listed, the commitment to reduce the shareholding of the company was made, and relevant regulations of the China Securities Regulatory Commission should be applied, which led to this violation of the commitment to reduce the shareholding. At present, the share reduction has been stopped, and I sincerely apologize for the impact on the company and all shareholders of the company due to the violation of the commitment.

WuXi AppTec’s prospectus shows that, as shareholders of the company, companies such as Shanghai Yingyi have made promises regarding the lock-up and reduction of the company’s shares:

“If the company reduces its holdings of the company’s shares issued before the company’s initial public offering, if the company uses a centralized bidding transaction method, it will disclose its shareholding reduction plan in advance 15 trading days before the first shareholding reduction, and reduce its holdings by other means. The company’s stocks will be announced three trading days in advance. The company is willing to bear the legal liabilities arising from the violation of the above-mentioned commitments. In the event of a situation that requires compensation to investors, the company shall bear the full liability for compensation.”

Public information shows that the executive partner of Shanghai Yingyi is Jiangsu Ruilian Investment, and its legal representative, Chen Zhijie, was the head of the M&A business and investment banking department of Huatai United Securities. Such professionals are not familiar with market rules, and this apology is naturally unacceptable to investors.

Attorney Zhang Yuanzhong, director of Beijing Wentian Law Firm, said that Shanghai Yingyi’s approach has clearly violated the provisions of Article 8 of the “Regulations on Share Reduction of Shareholders of Listed Companies, Directors, Supervisors, and Senior Executives” on the disclosure of information on reductions: “Listing The company’s major shareholders, directors, supervisors, and senior executives plan to reduce their shareholdings through a centralized bidding transaction on the stock exchange, and they shall report to the stock exchange 15 trading days before the first sale and disclose the share reduction plan in advance, and the stock exchange shall put it on record.”

Regarding this incident, Zhang Yuanzhong stated that relevant provisions of Article 197 of the Securities Law should be applied to impose fines and warnings. Since it is the shareholder’s own behavior to reduce shares in violation of regulations, listed companies do not need to bear the responsibility.

Article 197 of the “Securities Law” stipulates that if the information disclosure obligor fails to submit the relevant report or fulfill the information disclosure obligation in accordance with the provisions of this law, it shall be ordered to make corrections, be given a warning, and impose a penalty of more than 500,000 yuan and 5 million yuan. The following fines; the directly responsible persons in charge and other directly responsible persons shall be warned and imposed a fine of not less than 200,000 yuan but not more than 2 million yuan.

But in fact, incidents of illegal shareholding reduction are not uncommon. There are many reasons for violations, and the ultimate punishment is mostly thunder and rain.

In February of this year, Marumi’s third largest shareholder and largest tradable shareholder, L Capital Guangzhou Beauty Ltd., reduced its holdings by 260,000 shares in violation of regulations. The reason was that its staff changes were not handed over in time before and after the Spring Festival, and it was mistaken that it was still in the implementation period of the reduction plan. .

In early June, the incident had a result, and shareholders who violated the regulations received only one warning letter.

Attorney Zhang Yuanzhong said that the increasing number of shareholders’ illegal shareholding reductions is due to insufficient law enforcement, which is difficult to achieve from the perspective of prevention. The key is that follow-up punishments must be implemented in order to truly play the role of “killing chickens and monkeys.”

It is worth mentioning that at the same time that Shanghai Yingyi’s illegal shareholding reduction incident was announced, WuXi AppTec’s report on changes in equity disclosed that 22 companies including actual controllers, persons acting in concert, and delegated voting parties were involved as information disclosures. Obligors still have plans to reduce their holdings of WuXi AppTec’s shares in the next 12 months. They will reduce their holdings of WuXi AppTec’s shares according to market conditions and perform relevant information disclosure obligations; and they will not increase their holdings in the next 12 months. Mingkangde shares plan.

The announcement showed that after Shanghai Yingyi reduced its holdings, WuXi AppTec’s actual controllers Li Ge, Zhao Ning, Zhang Chaohui, and Liu Xiaozhong collectively controlled 25.16% of WuXi AppTec’s voting rights through these 22 institutions.

As of midday’s close, WuXi AppTec’s stock price fell 1.37% to close at 144.02 yuan, with a total market value of 423.5 billion yuan.

People in Lao Chai, Y Ty commune clean up the stream flowing through the village. Photo: CX Environmental sanitation criteria in the construction of new rural areas in the highlands are difficult to achieve. However, Y Ty commune (Bat Xat district, Lao Cai) has its own way of doing it. Accordingly, implementing the criteria of environmental sanitation in the construction of new rural areas, people in Lao Chai village, Y Ty commune and many other villages have applied the regulation that if anyone dumps garbage indiscriminately into the stream or throws garbage around the village, will be sanctioned according to “reason 36” of the people here. Specifically, “36” stipulates that anyone who throws garbage indiscriminately will be fined 36kg of live pigs, 20kg of rice and 20 liters of alcohol. The implementation of environmental sanitation criteria in the construction of new rural areas in the highlands encountered many difficulties. However, since the application of reasonable sanctions, people have become more aware to work with local authorities to implement this criterion. In Lao Chai, Y Ty commune, people not only actively clean up the village but also pick up trash from two streams flowing through the village. Lao Chai people bring cement to build inter-village roads. Photo: CX Mr. Ha Ngoc Linh – Vice Chairman of the People’s Committee of Y Ty Commune said that reason is a common way of calling people, in fact this is a convention, the village convention has been approved by the commune and district after that, only to be approved. apply. The application of conventions and conventions is even more effective than the provisions of the law because the awareness of ethnic minorities is still low. Thereby, people join hands with the local government to build a new rural area Mr. Chu Xe Xa – a resident of Lao Chai village, Y Ty commune, said that in parallel with the implementation of environmental sanitation criteria in the construction of new homes, the people of Lao Chai village know well the necessity of the road. “The previous households’ houses did not have access roads, the way down was registered as the road connecting the surrounding households and also the road in the village. Households without garbage pits were registered as garbage pits. Households without pits were registered as garbage pits. If you use manure for cattle, you will register it as a manure pit. Households that do not have a toilet will register as a latrine with the village head and all households who register to do so will be provided with cement,” said Mr. Xa. Currently, Lao Chai people have been actively implementing two criteria at the same time, namely, environmental sanitation and traffic criteria, with the expectation that Lao Chai will soon complete the criteria for building a new rural area for the future. people’s lives are raised. From there, Lao Chai will become a bright spot and be more known to friends near and far and tourists in the coming years. The concrete road in Lao Chai village, Y Ty commune is about to be completed. Photo: CX In Lao Chai, people’s awareness has been raised somewhat, especially in the construction of new rural areas. Mr. Xa said that building a new village is the State and the people working together and the direct beneficiaries are the people. Therefore, in the construction of new rural areas, it is necessary to have village officials who do their best for the people and for the renewal of society so that the people will follow and follow. Currently, Y Ty is one of the attractive tourist attractions. Y Ty is about 100km from Lao Cai city. To get to Y Ty border commune, you can go from Lao Cai city to Trinh Tuong commune to go to Lung Po – where the Red river flows into Vietnam, then through A Mu Sung to arrive at Y Ty. The roads will go through old forests with old trees, and only a few roofs on the side of the mountain. Living in Lao Chai are mainly Ha Nhi people. They stayed in the log house built of earth, like in a fairy tale. Going to Y Ty is to hunt clouds and admire beautiful scenery, but experiencing the life of Ha Nhi people here is also very interesting. Y Ty is changing day by day thanks to the people and local authorities actively participating in the construction of new rural areas; At the same time, many large corporations have come here to invest in tourism with thousands of billions of dong.