Author | Zheng Li
Edit | High Mountains
Source | Unicorn Finance
The "personal department" public offering of Chunhou Fund is encountering an "eventful autumn".
Following the exposure of a series of problems such as "disappearing board of directors", "shareholder infighting" and "omissions in regular reports", before the Mid-Autumn Festival, the regulator issued 8 fines to Chunhou Fund, involving fund managers, chairmen, general managers and shareholders.
Since 2022, the contradictions between the shareholders of Chunhou Fund have continued to stage and escalate, especially the identity of the second shareholder Liu Zhiwei and his private acquisition of shares, which has triggered a strong counterattack from the largest shareholder Xing Yuan.
Behind the infighting between the two important shareholders, there is also an entanglement of interests caused by the intricate equity transfer.
1
"Eat" 8 tickets, what are the shortcomings of internal control?
On September 14, the Shanghai Securities Regulatory Bureau disclosed eight administrative supervision measures against Chunhou Fund and its shareholders and executives.
According to the content of the fine issued by the fund manager, Chunhou Fund failed to perform its equity affairs management obligations in accordance with the law, and failed to accurately judge the impact of shareholders on the company's operation and management and report relevant information in a timely manner in accordance with the law when it was aware of the company's relevant equity changes.
Source: Canned Gallery
In response to the above problems, the Shanghai Securities Regulatory Bureau decided to order Chunhou Fund to make corrections within 3 months from the date of receipt of the decision, and suspend the acceptance of Chunhou Fund's public fund product registration application and the filing of the new private asset management plan during the rectification period.
Another fine shows that the 2023 annual report, the first quarter report of 2024 and the second quarter report of 2024 of the fund products publicly disclosed by Chunhou Fund did not prepare the content of the important reminder part in accordance with the relevant regulations, which violated the relevant provisions of the "Administrative Measures for Information Disclosure of Publicly Offered Securities Investment Funds", and the Shanghai Securities Regulatory Bureau took administrative supervision measures against Chunhou Fund to order corrections.
Before August 31, 2024, Chunhou Fund shall submit a written report to the Shanghai Securities Regulatory Bureau.
In addition to the company being fined, the chairman and general manager, as well as the shareholders, also received the fine.
According to the content of the fine disclosed by the Shanghai Securities Regulatory Bureau, because Jia Hongbo, chairman of Chunhou Fund, failed to perform his obligations on the management of equity affairs in accordance with the law, and failed to accurately judge the impact of shareholders on the company's operation and management and report relevant information in a timely manner in accordance with the law when he was aware of the company's relevant equity changes, the Shanghai Securities Regulatory Bureau determined that Jia Hongbo was an unsuitable person and was not allowed to serve as a director, supervisor and senior management of the public fund manager within three years from the date of receipt of the decision.
However, Xing Yuan, the general manager of Chunhou Fund, failed to perform the management obligations of equity affairs in accordance with the law, and failed to accurately judge the impact of shareholders on the company's operation and management and report relevant information in a timely manner in accordance with the law when he was aware of the company's relevant equity changes.
At the same time, when Xing Yuan decided to dispose of the equity of Chunhou Fund, she failed to perform the obligation to report major events in a timely manner as required, and the Shanghai Securities Regulatory Bureau decided that Xing Yuan shall not exercise the shareholder voting rights, dividend rights, preemptive subscription rights, access and copy rights and other shareholder rights stipulated in the company's articles of association before correcting the illegal acts.
In addition, Liu Zhiwei, the second shareholder of Chunhou Fund, signed the equity transfer agreement of Chunhou Fund with many people and paid the equity transfer money, which seriously affected the company's equity structure and corporate governance stability, and had a significant impact on the company's operation.
In response to the above problems, the Shanghai Securities Regulatory Bureau ordered Chunhou Fund to make corrections within 60 working days, and transfer all the equity of Chunhou Fund held by Liu Zhiwei to a qualified transferee within the aforementioned time limit. Before the completion of the full equity transfer, Liu Zhiwei shall not exercise the voting rights, dividend rights, preemptive subscription rights, access and copying rights and other shareholder rights stipulated in the articles of association of the company.
However, Li Xiongxiong, the third shareholder of Chunhou Fund, and Dong Weijun, the fourth shareholder, failed to perform their obligations to report major events in a timely manner in accordance with the regulations when deciding to dispose of the equity held by Chunhou Fund, which violated the Fund Law. The Shanghai Securities Regulatory Bureau decided that Li Xiongli and Dong Weijun shall not exercise shareholders' voting rights, dividend rights, preemptive subscription rights, access and copying rights, and other shareholder rights stipulated in the company's articles of association.
On September 17, Chunhou Fund issued the "Statement of Licensed Promoter Xing Yuan on the Company's Equity Transfer, the Inability of the Board of Directors to be Effectively Convened, Information Disclosure and Other Relevant Circumstances" (hereinafter referred to as the "Statement"), which mainly responded to the situation of equity transfer and rectification with Liu Zhiwei, the reasons for the inability of the company's board of directors to be effectively convened and the information disclosure of the company.
Xing Yuan said that under pressure from Liu Zhiwei and the complex social connections behind him, she agreed to sell 10% of the equity and only received a down payment. Liu Zhiwei has continuously tried to transfer the company's equity to Lin Qiang, a joint venture management company, and related institutions and personnel engaged in structured bond issuance. However, whether it is really as Xing Yuan said, I believe it will soon come out.
Chunhou Fund said that in order to safeguard the interests of holders, on the premise of ensuring that all data is true, accurate and complete, and that the regular reports are reviewed by the custodian and the annual reports are audited by external audit institutions, the company discloses the information on time based on facts.
As for the impact of the above-mentioned fines on the company, Chunhou Fund said that the company actively reported the relevant situation of the rectification work to the regulator in a timely manner, and the company's executives, investment research team and employees have been relatively stable.
On August 31, Chunhou Fund issued an announcement confirming the triple identity of the second shareholder Liu Zhiwei. Prior to this, in April, the company had handed over the evidence clues to the regulators, and after discovering the problem, it also made risk isolation and cutting measures with Liu Zhiwei and his related personnel.
Regarding the reason for the "disappearance" of the board of directors in the information disclosure of the report, Chunhou Fund has also unveiled the mystery before, indicating that there is indeed a hidden reason for the violation, and the inability of the board of directors to effectively convene is based on the above circumstances and legal reasons.
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Disappearing board
The reason why Chunhou Fund has attracted market attention can be found from the clarification announcement issued by the company.
On August 31, Chunhou Fund disclosed the 2024 semi-annual report, in an important reminder, Chunhou Fund said that because the company's board of directors could not be effectively convened, the fund manager guaranteed that the information contained in this report did not contain false disclosures, misleading statements or material omissions, and assumed individual and joint legal responsibility for the authenticity, accuracy and completeness of its contents, which was reviewed by the custodian bank.
In the four disclosure quarters since the beginning of 2024 (2023 annual report, 2024 first quarter report, 2024 second quarter report, and 2024 semi-annual report), all the relevant content of the board of directors and chairman of the board of directors has been erased.
For example, in the 2023 annual report, there is no conventional statement that "it has been signed by more than two-thirds of the independent directors and signed by the chairman". In the periodic report, the phrase "guarantee of the board of directors and directors of the fund manager" has been changed to "guarantee of the fund manager".
Article 3 of the General Provisions of the Guidelines for the Content and Format of Information Disclosure of Securities Investment Funds No. 2 - Content and Format of Annual Reports revised and issued by the China Securities Regulatory Commission stipulates that, in addition to the guarantee and commitment made by the board of directors and directors, the signature and consent of more than two-thirds of the independent directors is required, and the signature of the chairman of the board of directors is required.
Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, believes that the regulatory authorities have very strict requirements for the disclosure of market entities, whether it is a listed company or a public fund company. If the annual report is not signed by the independent directors or signed by the chairman, it may violate the relevant regulations, which may not only affect investors' trust in the company, but also may harm investors' interests. If there is an irregularity in the information disclosure of the mixed annual report of Chunhou Xinze, it may be concerned and investigated by the regulatory authorities, and the interests of investors may also be affected.
And why can't the board of directors convene effectively? Chunhou Fund also responded.
First of all, as the chairman of the company, Jia Hongbo was punished by the regulator, and was deemed by the regulator to be an inappropriate person in the industry, and was suspended from the powers of the chairman and director in accordance with relevant laws and regulations and the company's internal system. The "issuance by the chairman" required by the fund letter disclosure cannot be effectively "spoken" in the semi-annual report.
On March 18, due to the failure to perform the management obligations of equity affairs in accordance with the law, and the failure to accurately judge the impact of shareholders on the company's operation and management and timely report relevant information in accordance with the law, the regulator issued a fine to Chunhou Fund and Chairman Jia Hongbo when it was known about the relevant equity changes of Chunhou Fund. Chunhou Fund was ordered to rectify, and the company's equity-related matters were reported to the regulators in a timely, complete and full manner.
In addition, as the company's second shareholder Liu Zhiwei, Chunhou Fund's announcement exposed its triple identity.
Chunhou Fund said in an announcement on August 31 that in April 2024, the company did find that Liu Zhiwei had a triple identity, including that Liu Zhiwei held two sets of second-generation resident identity cards of the People's Republic of China, and no later than May 26, 2017, Liu Zhiwei had obtained Hong Kong permanent resident status. The company has formally submitted the relevant report to the regulatory authorities after sorting out the evidence clues and relevant circumstances, and is waiting for further verification and verification by the regulatory authorities and issuing handling opinions. Since the discovery of the impact of Liu Zhiwei's triple identity on the company, Chunhou Fund immediately and effectively took risk isolation and cutting measures with the shareholder and his related personnel.
Liu Zhiwei holds two sets of second-generation resident ID cards in mainland China, with numbers 33010619671020**** and 43250119671020**** respectively; After residing in Hong Kong in December 2009, he holds a Hong Kong Resident Identity Card with the number R80321*(*).
According to the information released on the official website of the China Securities Regulatory Commission, the time when Chunhou Fund obtained the public offering license was October 2018, can Liu Zhiwei, as a permanent resident of Hong Kong, apply to become a shareholder of a public offering institution in the mainland? It's worth paying attention to.
Shenzhen Business Daily quoted sources as saying that Liu Zhiwei was abroad, including a regulatory notice requiring Liu Zhiwei to conduct an on-site conversation, but Liu Zhiwei refused on the grounds that he was living abroad and could not return to China.
On the second day of Chunhou Fund's response, Liu Zhiwei also sent a "Letter on Requesting Chunhou Fund to Stop Publishing False Remarks and Regulate Corporate Governance" (hereinafter referred to as the "Request Letter") to all shareholders, directors, supervisors and all employees of Chunhou Fund in response to the "triple identity".
According to the "Demand Letter", the statement about his so-called "triple identity" is suspected of slander; There is no factual or legal basis for the claim that he is "suspected of using multiple identities to carry out a series of relatively serious violations of laws and regulations, such as judicial arbitrage and regulatory arbitrage", let alone any administrative or judicial organ to confirm it.
In addition, in the above-mentioned "Demand Letter", Liu Zhiwei also accused Xing Yuan, the general manager and legal representative of Chunhou Fund, and relevant team members of Chunhou Fund of embezzling shareholders' funds, obstructing and boycotting the convening of the board of directors, nepotism and other violations of laws and regulations.
With the clarification statement of the company and Liu Zhiwei and the exposure of the "Demand Letter", the entanglement between the shareholders of Chunhou Fund has also surfaced with the voices of both parties.
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2. How do shareholders control the board of directors?
Chunhou Fund was established in October 2018, is a "personal" public offering, the company was established at the beginning of the establishment of 6 shareholders, holding more than 20% of the shares, namely Xing Yuan held 31.2% of the shares, Liu Zhiwei held 26% of the shares, Li Xiong held 21% of the shares.
Source: Canned Gallery
Since its inception, the shareholders of Chunhou Fund have not changed on the surface, but in 2022, nearly half of the senior management and board members have changed.
In 2022, Li Xiongxiong, the third shareholder of the company, and Dong Weijun, the fourth shareholder, stepped down as chairman and deputy general manager successively, and both withdrew from the company's senior management. Jia Hongbo, Xue Lili, and Wu Yi are new to the management and serve as chairman, deputy general manager, and executive vice president respectively. At the same time, Li Yingui, president of Warm Current Assets, also joined Chunhou Fund.
A person familiar with the matter revealed to the "Financial Associated Press" that the personnel changes and follow-up corporate governance problems were caused by Liu Zhiwei's private resale of shares.
According to the above-mentioned insider, around March 2022, Liu Zhiwei privately signed an equity sale and purchase agreement with Li Xiongxiong, the third shareholder of Chunhou Fund, and Dong Weijun, the fourth shareholder, to carry out equity acquisition. At the same time, it also promised to give Li Xiongxiong additional compensation, and the equity sale and purchase agreement also stipulated that the rights of directors corresponding to the equity of Li Xiongli and Dong Weijun would be transferred. Under some operation, Liu Zhiwei actually owns the controlling stake of the company and becomes the actual largest shareholder of the company, with a shareholding ratio of 57%.
According to the "Financial Associated Press", Liu Zhiwei also informed Xing Yuan as the largest shareholder that he would sell his shares, part of which would be transferred to Jia Hongbo and Li Yingui by agreement, and as consideration, it was clear that Jia Hongbo would enter the company as chairman and Li Yingui would serve as vice chairman.
In the end, Liu Zhiwei replaced two members of the board of directors, namely Zhang Hai and Liu Changguo, who will newly enter the board in 2022, and both are Liu Zhiwei's Wudaokou alumni.
In response to the above-mentioned report on Xing Yuan's sale of the company's equity, Liu Zhiwei said in the "Request Letter" that on April 14, 2022, at Xing Yuan's strong request, although he had refused many times before, he finally signed the "Equity Transfer Agreement" with him, transferring his 10% equity in Chunhou Fund to him at a price of 40 million yuan, and Xing Yuan actually received the transfer money of 26 million yuan. The equity transfer was invalid because it was not approved by the regulatory department, and the Shanghai Securities Regulatory Bureau also expressly required the shareholders involved to rectify, so Xing Yuan should return the transfer money to me.
According to the report, the Shanghai Securities Regulatory Bureau determined that the equity trading transaction of Chunhou Fund was in violation of regulations, ordered the fund manager to make corrections within three months, and required the equity to be returned. However, as of now, the rectification period has expired, and the return of equity has not been completed.
According to Qixinbao information, Liu Zhiwei has invested in 35 companies, worked in 22 companies, and has 48 affiliated companies.
In October 2023, Li Xionghou, who stepped down as chairman, took Chunhou Fund to court due to a labor contract dispute, filed the case on October 7 of the same year, and filed an application for withdrawal on October 19.
4
How to improve the internal control system of the "personal department" public offering?
Behind the infighting among shareholders is the in-depth thinking on the management and internal control of "individual" public funds.
Wang Tieniu, director of the Jinxin Fund Evaluation Center of Jin'an, told China Business News that "individual" public fund companies need to continue to strengthen their internal control management and internal control mechanisms. For example, in terms of shareholder structure, there needs to be more checks and balances management mechanisms, and equity disputes need to be resolved through negotiation through internal management mechanisms such as the board of directors and the board of supervisors under the premise of compliance, so as not to affect the company's operation or even violate laws and regulations. "The managers of relevant companies also need to have a better sense of compliance, and must strictly abide by the relevant laws, regulations and industry norms of the state and relevant departments in terms of strategy formulation, incentive mechanism, information disclosure and other aspects." Wang Tieniu emphasized.
In addition, in the operation of a fund management company, the general manager is responsible for the day-to-day actual operation, and the chief inspector is responsible for compliance supervision, both of which have corresponding compliance management responsibilities.
According to the information disclosed on the official website of Chunhou Fund, Xing Yuan is the general manager and legal representative of Chunhou Fund, and Xing Yuan is also the largest shareholder of Chunhou Fund. Shen Zhiting is the company's current chief inspector and will take office from April 18, 2023.
In the case of the company's special personnel and posts, the illegal disclosure of regular reports of Chunhou Fund's fund products from annual reports to quarterly reports, one after another illegal letters, if the general manager and the chief inspector do not know, it is unreasonable, at least they have not fulfilled their compliance management duties. If it is a knowing, where does the confidence come from?
It is worth noting that on May 24, 2022, Chunhou Fund announced that Wu Yuan was appointed as the executive deputy general manager of the company. Up to now, according to the official website of Chunhou Fund, Wu Yuan is still the executive deputy general manager of the company.
According to Wu Yuan's personal biographical information, from July 2008 to April 2016, he was promoted from the deputy chief staff member of the Market Supervision Division of the First Futures Department to the chief staff member of the Supervision Division 4 of the Fund Department, and then served as the chief staff member of the General Department of the Private Equity Department. From May 2016 to December 2016, he directly went to work for Nanhua Futures, and joined Nanhua Fund as the chief inspector in December 2016; In June 2018, he was appointed as the Chief Inspector of Caitong Fund. In May 2022, the official website of Chunhou Fund announced that Wu Yi would serve as the executive deputy general manager.
Xing Yuan, general manager of Chunhou Fund, used to be the head of the sales department of Caitong Fund, and Shen Zhiting, chief inspector, also worked in the risk control department of Caitong Fund.
Wu Yi, as a practitioner of the regulatory department, especially in the supervision department of the fund department of the regulatory department, has served as the chief inspector of the public offering company for many times, and may have more experience in compliance and risk control, which can theoretically bring about the improvement of the company's internal control compliance issues and avoid some risks of violations.
Source: Canned Gallery
At the same time, as a senior executive with many years of experience in regulatory departments, has Wu Yuan warned the fund of the risk of risk control violations? Have you ever warned that there are compliance risks for fund companies? As a fund executive with many years of regulatory and compliance experience, what is Wu Yuan's attitude towards these problems of Chunhou Fund? All questions and answers still have to wait for the truth of the incident to be further revealed.
In the context of increasingly standardized and intensified supervision in the financial market, any neglect of compliance and lack of internal control will face severe legal consequences.
In recent years, the regulatory authorities have intensified the supervision of the capital market, especially the financial industry, and proposed to firmly grasp the main line of strengthening supervision, preventing risks, and promoting high-quality development, and implement the requirements of "long teeth and thorns" and angular supervision.
In March 2024, the China Securities Regulatory Commission (CSRC) issued the "Opinions on Implementing the Standards of Politically Competent, Competent, and Style-Based, and Comprehensively Strengthening the Self-Construction of the CSRC System".
In response to the much-concerned issue of the CSRC's self-construction, Zhang Chaodong, head of the Personnel and Education Department of the China Securities Regulatory Commission, said in an interview with media reporters that the "revolving door" and "escape resignation" of politics and business have seriously damaged the credibility of supervision and the healthy ecology of the capital market, and have been widely criticized.
As a public fund, the interests of investors come first. If the company's management and senior management are negligent in their duties and negligence, resulting in internal compliance risks, it is easy to form insider control, which will undoubtedly increase the risk of infringement of investors' rights and interests in disguise.
When will the shareholder infighting of Chunhou Fund subside after the regulatory fine is issued, and how long will the board of directors disappear? Welcome to leave a message in the comment area.