Lawyers believe that the alleged misrepresentation of the subsidiary was convicted Lukang Technology did not disclose

Lukang Technology (601599.SH) specializes in the production and sales of all kinds of knitting yarns and high-grade worsted fabrics. In 2014, the company completed the acquisition of 100% equity of Century Changlong Film and Television Co., Ltd. (hereinafter referred to as “Century Changlong”), forming a business trend of wool textiles and film and television.

The judicial judgment recently obtained by the reporter of China Business News showed that Century Changlong violated state regulations, and Chen, a person in charge directly under his unit, gave the state staff a rebate of 1.45 million yuan. The circumstances were serious. The Fengtai County People's Court of Anhui Province sentenced the defendant. The actions of the unit long-term dragon and the accused Chen have constituted the crime of bribery.

According to the financial report, in 2015, Lukang Technology achieved a net profit of approximately RMB 119 million. Century Changlong realized a net profit attributable to owners of the parent company of RMB 67,784,200, accounting for more than 50%. What is embarrassing is that Lukang Technology did not make any public disclosure on the above judgment and completed the issuance in March this year.

Unit bribery

The judgment showed that on November 3, 2011, Zhang Mou (sentenced), deputy director of the program purchase and sale center of the editorial and sales office of Anhui Radio and Television, recommended that Anhui Radio and Television purchased the TV drama "Reunion" issued by Fujian Century Changlong Film and Television Culture Development Co., Ltd. Copyright right. Defendant Chen, as the deputy manager of Century Changlong, was responsible for the issuance of the TV series. In the second half of 2012, he gave Zhang a rebate of 600,000 yuan in the hotel where he lived in Hefei, Anhui; in the first half of 2013, in Anhui In the city of Zhang, the car gave Zhang a rebate of 600,000 yuan. On February 6, 2013, Anhui Radio and Television purchased the copyright of the TV series "My Mother is an Angel" issued by Shanghai West Coast Film and Television Culture Development Co., Ltd. (a wholly-owned subsidiary of Century Changlong Film and Television Co., Ltd.), the defendant Chen One day at the end of 2013, Zhang was given a rebate of 250,000 yuan in Zhang’s car in Anhui’s Feifei City.

On August 3, 2015, the Fengtai County People's Court of Anhui Province ruled that the defendant unit Century Changlong Film and Television Co., Ltd. committed a bribery and sentenced a fine of RMB 500,000 (paid); the defendant Chen guilty of bribery, He was sentenced to one year and six months in prison and suspended for two years.

On the evening of May 21, 2014, Lukang Technology released an asset acquisition plan. The company intends to acquire 100% equity of Century Changlong by a combination of issuing shares and paying cash. The transaction price is 470 million yuan. On October 30, 2014, the 100% equity of Century Changlong held by the counterparty was completed, and Century Changlong became a wholly-owned subsidiary of Lugang Technology. On November 21, 2014, Lugang Technology completed the matching financing, Century Changlongyuan Chen Hanhai, the controlling shareholder and actual controller, became the second largest shareholder of Lugang Technology. On December 26, 2014, Chen Haohai became the director of the third board of directors of the company.

According to the financial report, in 2015, Lukang Technology achieved a net profit of approximately RMB 119 million. Century Changlong realized a net profit attributable to owners of the parent company of RMB 67,784,200, accounting for more than 50%. What is embarrassing is that Lukang Technology did not make any public disclosure on the above judgment.

Article 30 of the Measures for the Administration of Information Disclosure of Listed Companies stipulates: In the event of a major event that may have a significant impact on the transaction price of the listed company's securities and its derivative products, the listed company shall immediately disclose the event if the investor has not known it. Causes, current status and possible effects. The major events mentioned in the preceding paragraph include: the company is suspected of violating the law and being investigated by the competent authority, or subject to criminal punishment and major administrative punishment; the company's directors, supervisors, and senior management personnel are suspected of violating the law and discipline by the competent authorities to investigate or take enforcement measures. Article 33 stipulates that if a major event stipulated in Article 30 of the Measures occurs in a controlling subsidiary of a listed company, which may have a greater impact on the transaction price of the listed company's securities and its derivatives, the listed company shall perform its information disclosure obligations.

The director of a listed company believes that the criminal punishment of a fully controlled subsidiary with a net profit ratio of more than 50% is definitely a major event described in the above-mentioned measures, and has reached the standard of trust.

In an interview with reporters, Shanghai Huarong Law Firm Xu Feng said that a subsidiary whose net profit accounted for more than 50% was sentenced by the court to constitute a bribery, and the listed company holds 100% of the shares. For major events, the listed company should disclose it within two trading days, and if it is not disclosed, it will be falsely stated.

In this regard, Lugang Science and Technology Secretary secretly told reporters that the long-term bribery of the Century Changlong had been reported to the relevant parties, but it was not a major event.

Additional is not affected

It is noteworthy that on December 26, 2014, Lukang Technology held the second extraordinary shareholders meeting in 2014 to deliberate and approve relevant proposals on the company's non-public offering of shares, and proposed to issue 159,918,200 shares to a specific target. The total amount of funds raised shall not exceed RMB 1.2 billion.

On July 27, 2015, Lukang Technology announced that after negotiations and discussions, the company and relevant intermediaries decided to submit the application for suspension of this non-public offering of shares to the China Securities Regulatory Commission. After the relevant verification is completed, the company will Apply to the China Securities Regulatory Commission for resumption of review as soon as possible. On November 12, 2015, the company resumed the application for the administrative license.

The reporter noted that on November 17, 2015, Lukang Technology and two specific investors in this issue, namely Qian Wenlong and Chen Yuhai, signed the "Termination Agreement on the Share Subscription Agreement" respectively, Qian Wenlong and Two of Chen Yihai's specific investors are no longer involved in this subscription.

In fact, Chen Haohai also paid bribes to Zhang Suzhou, the former director of Anhui Radio and Television.

According to the 澎湃 news report, Chen Haohai, the legal representative of Century Changlong Film and Television Co., Ltd., gave Zhang Suzhou a 300,000 yuan and a jade jewelry worth 1.6667 million yuan.

On April 17, 2015, Lugang Technology announced that the company's director, Mr. Chen Haohai, voluntarily resigned as the director and deputy general manager of the company's board of directors. He directly held the company's 3,328,270 shares and indirectly held the company's 1,651,300 shares through Xiamen Lafeng. Direct and indirect holdings account for 9.02% of the company's total share capital, and the shares of the company will be managed in strict accordance with relevant laws, regulations and related commitments. Intriguingly, Lukang Technology also said in the announcement that the company and Century Changlong Film & Television Co., Ltd. are in normal production and operation.

On December 25, 2015, Lukang Technology's non-public offering of shares was unconditionally approved by the China Securities Regulatory Commission's Issuance Review Committee. On March 3, 2016, the newly issued shares were registered and custody procedures at Shanghai Branch of China Securities Depository and Clearing Co., Ltd., and the total amount of funds raised was nearly 1 billion yuan.

Article 48 of the Measures for the Administration of Securities Issuance of Listed Companies stipulates that if a listed company has significant events before issuing securities, it shall suspend the issuance and report to the China Securities Regulatory Commission in a timely manner. If the matter has a significant impact on the conditions of this offering, the application for the issuance of securities shall be re-approved by the China Securities Regulatory Commission. Obviously, Lukang Technology’s additional issuance has not been affected by the above incidents.

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