On the evening of October 10, the China Securities Regulatory Commission (CSRC) issued a notice regarding administrative penalty pre-notification for Yuancheng Environment Co., Ltd., a company listed on the Shanghai Stock Exchange main board, suspected of false records in periodic financial reports. Simultaneously, *ST Yuancheng released an announcement disclosing the "Administrative Penalty Pre-Notice" (Zhe Penalty Letter [2025] No. 14). Previously, *ST Yuancheng had been subject to CSRC investigation since July 1, 2025, for suspected false disclosure in annual reports and other periodic financial statements.

On the evening of October 10, the CSRC issued a notice regarding administrative penalty pre-notification for Yuancheng Environment Co., Ltd. (abbreviated as "*ST Yuancheng"), a company listed on the Shanghai Stock Exchange main board, suspected of false records in periodic financial reports. Simultaneously, *ST Yuancheng released an announcement disclosing the "Administrative Penalty Pre-Notice" (Zhe Penalty Letter [2025] No. 14). Previously, *ST Yuancheng had been subject to CSRC investigation since July 1, 2025, for suspected false disclosure in annual reports and other periodic financial statements.

Upon investigation, *ST Yuancheng was found to have three main violations: First, false records existed in annual reports from 2020 to 2022. Under the organization and instruction of actual controller Zhu Changren, the company artificially inflated labor and machinery costs for the Yuelongshan project along with corresponding output value, cumulatively inflating operating revenue by 209 million yuan and total profit by 50.46 million yuan. Second, the company failed to promptly account for price audit differences in the Huaiyin project, resulting in inflated operating revenue of 14.16 million yuan and total profit of 13.45 million yuan in the 2022 annual report. Third, the company fabricated major false content in its 2022 private placement documents, citing false financial data from the Yuelongshan project, with the issuance raising 285 million yuan.

The CSRC plans to impose severe penalties according to law: *ST Yuancheng will be ordered to make corrections and given a warning, with a total fine of 37.4546 million yuan; actual controller Zhu Changren will be given a warning and fined a total of 28 million yuan, with a 10-year securities market ban; other responsible personnel Zhou Jinhai and Yao Lihua will each be fined 5 million yuan, while Yu Jianfei and Chen Ping will each be fined 2 million yuan, all receiving warnings.

Based on the findings, *ST Yuancheng's false records in annual reports from 2020 to 2022 are suspected of triggering circumstances for major violation forced delisting. The Shanghai Stock Exchange will initiate delisting procedures according to law. Regarding potential criminal clues, the CSRC will strictly transfer them to public security authorities according to law.

*ST Yuancheng stated that the company will fully cooperate with CSRC's relevant work, and production and operation conditions remain normal. The company will actively exercise its legal rights including hearings, statements, and defenses regarding the proposed penalty measures, with final results subject to the formal penalty decision.