On July 3, Cailian Press reported (Reporter He Fan) that tonight, hybio pharmaceutical (300199.SZ) announced that the former president was suspected of committing a crime in his official duties and the case has made new progress. The company immediately stated that it has zero tolerance for illegal behavior. The case has undergone a retrial after the first trial. A lawyer has analyzed for a Cailian Press reporter that when there are such situations as unclear or wrong establishment of facts, omission of parties, etc., the higher court will send the case back to the original court for retrial. After the retrial of the original court and the first-instance judgment, the parties have the right to continue to appeal and await the second-instance judgment or ruling.

This evening, hybio pharmaceutical announced that it has received the Criminal Ruling (No. 2023) Yue 0305 Criminal First 1110) issued by a court, which ruled that Yuan Jiancheng, former director and senior management personnel of the company, committed the crime of embezzlement of funds and has been sentenced by Shenzhen Nanshan District People's Court in Guangdong Province. Defendant Yuan Jiancheng was sentenced to three years and six months in prison for misappropriation of funds. The case has been judged by Shenzhen Nanshan District People's Court in Guangdong Province. If the judgment is not accepted, both the plaintiff and the defendant can appeal within the specified time limit.

Regarding the impact of the judgment on the company, hybio pharmaceutical stated in the announcement that Yuan Jiancheng's criminal behavior occurred six years ago, and he has resigned from the company in August 2019. After being taken into mandatory criminal measures by the public security organs for suspected crimes, the company has made provisions for the relevant expenses based on relevant accounting standards.

Also this evening, on the investor interaction platform, the company responded: "The company has established a strict supervisory mechanism and has zero tolerance for illegal behavior! Always adhering to compliance and legal regulations as the foundation of corporate governance, protecting the rights and interests of shareholders and listed companies."

This matter can be traced back to January 25, 2022, when the company announced that the former director and president Yuan Jiancheng was approved for arrest on suspicion of committing a crime in his official duties. Former director, secretary of the board of directors, and vice president Zhu Wenfeng was detained on suspicion of committing a crime in his official duties. The matter was related to their tenure in the company, and the funds involved in Yuan Jiancheng's criminal activity have been retrieved, with a total of over 36 million yuan.

According to the 2021 annual report, the company, based on prudence, offset the extended development expenses with the recovered funds, and provisioned the inbound transfer amount into other current liabilities, with the remaining amount recorded as other payables.

On February 15, 2022, the Nanshan District People's Procuratorate in Shenzhen filed a public prosecution with the Nanshan District People's Court on the crime of embezzlement of funds by Yuan Jiancheng (Shen Nan Jian Xing Su (2022) 117), alleging that he had used his position to embezzle company funds for personal use, in a significant amount, and should be held criminally responsible for the crime of embezzlement of funds.

In the first instance, the Nanshan District Court determined that Yuan Jiancheng illegally embezzled hybio pharmaceutical's funds of 16.85 million yuan and was guilty of embezzlement of funds, and was sentenced to four years in prison.

Subsequently, the Shenzhen Intermediate People's Court in Guangdong Province ruled to revoke the first-instance judgment of this case and sent it back to the Nanshan District Court for retrial.

Today's announcement of the Criminal Ruling marks a temporary end to this two-and-a-half-year-long litigation.

Regarding the reason for the ruling to be sent back for retrial, Xu Feng, Director of the Shanghai Jiucheng Law Firm, told Cailian Press that the specific situations of each case are different, and the higher court will make a ruling based on the trial situation. When there are such situations as unclear or wrong establishment of facts, omission of parties, or litigation requests, etc., the higher court will send the case back to the original court for retrial. After the retrial of the original court and the first-instance judgment, the parties have the right to continue to appeal and await the second-instance judgment or ruling.