SZSE Tightens Regulation on Disclosure of ST ZXBC’s Tender Offer

date: 2017-7-11

Recently, Zhenxing Biopharmaceutical and Chemical Co., Ltd. (hereinafter referred to as “ST ZXBC” or “the Company”) has attracted broad market attention for its tender offer event. In order to urge interested parties to perform their disclosure obligation as per rules and protect investors’ legitimate rights and interests, Shenzhen Stock Exchange (SZSE) has taken a series of regulatory measures. An SZSE officer stressed that listed companies and interested disclosure obligors should strictly abide by Securities Law, Corporate Law, Rules Governing Listing of Stocks, and other laws and regulations to truthfully, accurately, completely and fairly perform their information disclosure obligation in a timely manner and that no party should take inappropriate approaches to impede interested parties’ obligation performance or impair broad investors’ legitimate rights and interests.

 

When the morning session closed on June 21, 2017, the Company received the tender offer report summary and other disclosure documents from Hangzhou Zhemintou Tianhong Investment Partnership (Limited Partnership) (hereinafter referred to as “Zhemintou Tianhong” or “the Acquirer”) and immediately applied to SZSE for trading suspension in the afternoon. After the trading was suspended, SZSE has constantly urged the Company to perform its disclosure obligation in a timely manner and resume trading. The Company, however, did not disclose the disclosure materials submitted by the Acquirer until June 28. Meanwhile, the Company released an announcement that it would apply for continued trading suspension for major assets restructuring.

 

On the announcement day, SZSE issued a letter of concern to the Company and the Acquirer. On the one hand, SZSE required the Company to give explanation on the timeliness of disclosure, the truthfulness of restructuring planning and the protection of investors’ rights and interests. On the other, SZSE requested the Acquirer to make supplementary disclosure on the source of funds for acquisition, its equity structure and the objective of acquisition. On June 30, SZSE issued a second letter of concern to the Company, requiring the latter to explain whether the increase of shareholding by its directors and supervisors before the trading suspension constitutes insider trading. On July 4, the Acquirer sent its reply letter and relevant supplementary documents to the Company who refused without reasonable grounds to submit on behalf the relevant announcements to assist the Acquirer in performing disclosure obligation. On July 7, the Acquirer disclosed its reply letter, supplementary announcements on the tender offer report summary and other disclosure documents through SZSE’s “Shareholders’ Business Section” according to the Business Handling Guideline for Shareholders of Listed Companies.

 

The SZSE officer expressed that as the equity disputes of listed companies keep emerging in recently years, there are cases from time to time that public companies do not fully cooperate with their shareholders in performing disclosure obligation. And this has seriously impaired investors’ right to know. Accordingly, to vigorously address new situations and new issues in the market, SZSE opened the “Shareholders’ Business Section” in December 2016 which enables a second channel for disclosing the changes in shareholders’ equities. In the future, SZSE will keep deepening its disclosure system reform, imposing tighter regulation on information disclosure and protecting investors’ legitimate rights and interests to put the comprehensive strict rule-based regulation in place.