Text | Li Delin
The name of the independent director is hanging, and his opinion is not included in the company's periodic reports, so who is responsible if the company has problems? The five independent directors of Kangmei Pharmaceutical's fraud case were sentenced by the court to pay 360 million yuan in compensation, which kept many independent directors awake at night, and they took the money from selling cabbage, and finally had to lose their money? In addition to listed companies, public funds also have an independent director system, and now in the report of Chunhou Fund, the board of directors has a collective aphasia, where have they gone?
Founded in 2018, Chunhou Fund is a public fund with an individual department. As of the end of the second quarter of 2024, there are 44 funds under management with a management scale of 35.294 billion. It ranks 95th in public funds and top five in individual public offerings. As of June 30, Chunhou Fund has not received any revenue in the first half of 2024, and not a single new fund has been issued, and what is even more remarkable is that since the 2023 annual report and beyond, the shadow of the board of directors has disappeared in the regular reports of Chunhou Fund's products.
On July 19, Chunhou Xinze Flexible Allocation Hybrid Securities Investment Fund (hereinafter referred to as "Chunhou Xinze") announced its second quarter report, which is jointly managed by two fund managers, Liao Chenxuan and Xue Lili, of which Xue Lili is also the deputy general manager of Chunhou Fund. The Quarterly Report's distinctive "Important Notice" states that the Fund Manager warrants that the information contained in this report is free from false records, misleading statements or material omissions, and assumes individual and joint responsibility for the truthfulness, accuracy and completeness of its contents.
Turning over the quarterly report of Chunhou Xinze for the same period in 2023, the "Important Notice" said: The board of directors and directors of the fund manager guarantee that the information contained in this report does not contain false records, misleading statements or material omissions, and assume individual and joint responsibility for the authenticity, accuracy and completeness of its contents. Until the fourth quarter report of 2023, the "Important Notice" of Chunhou Xinze has been guaranteed by the board of directors and directors. However, in the 2023 annual report, the board of directors and directors' assurances disappeared.
Whether it is a public fund or a listed company, because it has to face hundreds of thousands, or even tens of thousands of public investors, regular reports are an important window for investors to observe funds or listed companies, and the board of directors as a decision-making body guarantees the authenticity, accuracy and completeness of quarterly reports and annual reports become an important basis for investors' decision-making.
Incredibly, it is not uncommon for such regular reports to disclose changes in face, and all of its products have the same problem. The fourth quarter report of 2023 has the assurance of the board of directors and directors, and in the annual report of 2023, there is only the guarantee of the fund manager. What is a fund manager, translated as a fund company. From the beginning of the 2023 annual report to the current periodic report, the fund manager is jointly and severally liable, which means that there is no specific person to be responsible.
Who is responsible for the Fund's periodic reporting?
As an important part of the capital market, supervision is the top priority, and whether it is a public offering by an institution or an individual, it must follow the Guidelines for the Content and Format of Information Disclosure of Securities Investment Funds No. 4 - Content and Format of Quarterly Reports (hereinafter referred to as the "No. 4 Standard") and the Guidelines for the Content and Format of Information Disclosure of Securities Investment Funds No. 2 - Content and Format of Annual Reports (hereinafter referred to as the "No. 2 Standard") issued by the China Securities Regulatory Commission. The periodic report requires the board of directors and directors to bear individual and joint legal responsibility for the authenticity, accuracy and completeness, and the annual report also needs to be signed and approved by more than two-thirds of the independent directors and signed by the chairman of the board.
Is the regular report of Chunhou Fund an omission? Or is there something else going on? According to the regulatory rules of the China Securities Regulatory Commission on the information disclosure of public funds, whether it is a quarterly report or an annual report, before the report is issued, a board of directors needs to be convened, and the board of directors must review the authenticity, accuracy and completeness of the report, especially the annual report needs to be signed by two-thirds of the independent directors and signed by the chairman himself. So has Chunhou Fund opened a board of directors from the beginning of the 2023 annual report to the present?
When formulating Standard No. 4, the CSRC also specifically emphasized that the provisions of this standard are the minimum requirements for the disclosure of information in the quarterly report of funds, and that fund managers should disclose all information that has a significant impact on investors' decision-making, regardless of whether there is any clear provision in this standard. So the regular report of Chunhou Fund is an important basis for investors' investment decisions, do they directly issue reports without a board meeting?
Both Standard 2 for annual reports and Standard 4 for quarterly reports clearly state that if individual directors cannot guarantee or disagree with the truthfulness, accuracy and completeness of the report, they should separately state their reasons and express their opinions. Among them, Standard No. 2 also specifically requires that the names of directors who did not attend the meeting be listed separately because they are related to annual financial reports. Therefore, if the board of directors is not convened in the regular report of Chunhou Fund, it should be made clear in the "Important Notice" of the report that the board of directors and directors did not meet.
So Chunhou Fund does not have the guarantee of the board of directors and the directors in the periodic report, and even the annual report is not signed by two-thirds of the independent directors, and there is no signature of the chairman of the board of directors. When formulating the standards, the CSRC also specifically mentioned that if some specific requirements of the standards are indeed not applicable to the fund, the fund manager may make appropriate amendments according to the actual situation without affecting the integrity of the disclosure content after approval by the CSRC.
Judging from the current public information of public funds, only Chunhou Fund is unconventional, and there is no guarantee from the board of directors and directors in the regular report. Is it true that Chunhou Fund opened the board of directors without an announcement? Or did they not hold a board of directors at all, and they deceived the world when the periodic report was disclosed? If the regular report of the public fund is not reviewed by the board of directors, then what is the responsibility of the board of directors of Chunhou Fund? Is it a virtual deal to deal with supervision? Or is insider control over the board?
Chunhou Fund manages more than 35 billion funds, if the company's board of directors is a decoration, then where is the standardization and compliance of corporate governance? Who will guarantee the rights and interests of investors? The fund manager, Chunhou Fund, is a legal person enterprise, and no one has a specific person to bear joint and several legal liability, so once the company's governance is derailed, who will be responsible? According to the 2024 revision of the compliance management standards for fund management companies, fund management companies should implement compliance management through effective internal control measures.
According to the public information of Chunhou Fund, the board of directors has 4 directors and 3 independent directors, of which Jia Hongbo is the chairman. It means that the board of directors of Chunhou Fund exists, so why is there no responsibility for the board of directors in the disclosure of periodic reports? There are two possibilities, one is that the board of directors is not held at all, and the other is that it is opened, and the company does not include it in the information disclosure. If the board of directors opened and did not make an announcement, then why didn't General Manager Xing Yuan and Chief Inspector Shen Zhiting prompt it?
In accordance with the rules of public funds, the general manager of the fund manager is responsible for comprehensively promoting and improving the effectiveness of the company's compliance management; The chief inspector is responsible for guiding the compliance management department to carry out compliance management work, and shall also focus on whether the information disclosure of funds and companies is true, accurate, complete, and timely, and whether there are any false records, misleading statements, or material omissions. Xing Yuan, who is the largest shareholder and legal representative, and Shen Zhiting, who joined the company in April 2023, did not notice that there was a problem with the disclosure of the report?
Now that the board of directors of Chunhou Fund is speechless, is the entire board of directors out of control? Or is insider control above the board? The new Company Law, which came into effect on July 1, requires financial institutions to establish effective checks and balances in decision-making, implementation and supervision, and strengthen the decision-making mechanism of the board of directors to prevent major shareholders or actual controllers from abusing their control. Chunhou Fund's regular report directors are no longer guaranteed, and general manager Xing Yuan and chief inspector Shen Zhiting should give investors a public statement.
According to Article 72 of the Company Law, if Jia Hongbo, the chairman of the board of directors of Chunhou Fund, is unable to convene and preside over the board of directors, or is unable to perform the duties of the chairman, in the absence of a vice chairman, Chunhou Fund shall be convened and presided over by a director jointly elected by more than half of the directors. If the board of directors does not act, or has become an ornament, the board of supervisors of Chunhou Fund may, in accordance with Article 80 of the Company Law, require the directors and senior management to submit reports on the performance of their duties.
Whether it is the "Company Law" or the series of administrative rules and regulations implemented by the China Securities Regulatory Commission specifically for public funds, aiming to strengthen the corporate governance of public funds, if the board of directors and directors cannot perform their duties normally, once the public funds that manage tens of billions of funds lose effective mutual restraint and mutual supervision, resulting in the company's management rights are too concentrated in internal managers or shareholders, they are easy to seek more self-interest, which increases the risk of infringement of investors' rights and interests in disguise.
There was a collective aphasia of the board of directors of public funds, and the publicly disclosed periodic reports did not comply with regulatory rules. Wu Qing, chairman of the China Securities Regulatory Commission, pointed out during the two sessions that it is necessary to comprehensively review and speed up the completion of the shortcomings and weaknesses of supervision in various fields, entities and links such as the stock market, bond market, futures and derivatives market, strengthen early correction of problem institutions and enterprises, and deal with all kinds of risks as soon as possible. In the face of the aphasia of the board of directors of Chunhou Fund, perhaps, the people will say, they are all singing leg cramps, why should they step down?