Financial Services Association, June 1 (Reporter Fang Yanbo) Recently, following the investigation of the company by the Securities Regulatory Commission and the actual controller being publicly condemned by the exchange, ST E-Lianzhong (300096.SZ) was also supervised by a group of four independent directors requesting the company and company management to pay great attention to and take necessary measures to resolve the impact of illegal guarantees and illegal loans on the company.

According to the announcement, the sole directors referred to the illegal guarantees and illegal loans in ST E-Lianzhong's “Notice Letter” due to multiple illegal guarantees and loans carried out by Zhang Xi, the company's original controller, and his related parties in the name of the company during the period 2020-2021. Among them, the two cases have not been resolved. The total amount of guarantee amounts and related interest on external loans and external co-borrowing/joint guarantee balances and related interest without legal approval procedures totaled about 770 million yuan.

The company said at a recent performance briefing that at present, the company's related illegal guarantees and illegal loans are in the litigation/arbitration stage. The arbitration case involving the company is still being tried, the judicial ruling has not yet been issued, and the company is awaiting the outcome of the trial.

ST E-Lian Zhong is not an exception. The Financial Services Association reporter noticed that since May, ST Zhongzhu (600568.SH) has also had a capital balance of 568 million yuan due to the former controlling shareholder Zhuhai Zhongzhu Group and its affiliates, *ST Tiancheng (600112.SH) has a total balance of 367 million yuan due to guarantees provided by the original controlling shareholder Galaxy Group and its affiliates, and ST Communications (600365.SH) has to cancel the guarantee due to irregularity; and 688287.SH Companies such as ST Yinjiang (300020.SZ), ST Lingda (300125.SZ), Tianli Lithium Energy (301152.SZ), *ST ICT (600289.SH), ST Sunshine (600220.SH), and ST Changkang (002435.SZ) were supervised by independent directors due to related parties' capital occupation or illegal guarantees.

Some market sources told reporters that acts such as capital occupation and illegal guarantees disrupt the capital market order and seriously infringe on the legitimate rights and interests of investors, and have always been abhorred by the market. Recently, the collective voices of several listed company directors have given full play to the effectiveness of the sole director system, and will form joint supervisory efforts for listed companies, their controlling shareholders, actual controllers, and other related parties.

Moreover, the appropriation of funds and illegal guarantees have always been the direction of severe crackdown by the supervisory authorities. According to incomplete media statistics, in 2023 alone, the Shanghai and Shenzhen Exchange imposed 45 disciplinary sanctions on major shareholders for illegally seizing capital, and severely punish those mainly responsible for irregularities, such as controlling shareholders and actual controllers.

According to the new delisting regulations under the new “National Article 9,” the requirements for mandatory regulatory delisting have been further raised. If the listing rules on the main board of the Shanghai Stock Exchange are clear, a delisting risk warning will be implemented if the balance of non-operating capital occupied by the controlling shareholder or related person of the controlling shareholder reaches 200 million yuan or more or more of the absolute value of the company's most recent audited net assets, is ordered by the China Securities Regulatory Commission but has not completed the rectification within the required period, and the rectification has not been completed within two months of the suspension of the company's stock trading. Those who fail to complete the correction and withdraw the warning two months after implementing the delisting risk warning may face mandatory delisting.

However, if the actual controller has changed before the new rules are issued and implemented, and the current actual controller has no relationship with the capital occupier, the new listing rules will not apply to the regulated capital occupation delisting category.

The aforementioned market sources concluded that the use of capital by controlling shareholders and illegal guarantees in listed companies indicates that there are major flaws in their standardized operation. Increasing efforts to clear up such problematic companies can effectively prevent further damage to investors' rights and interests.