On November 8, 2025, Tiansheng Pharmaceutical Group Co.,Ltd. (ST Tiansheng, Code: 002872) announced the receipt of a "Penalty Decision" issued by the Chongqing Bureau of the China Securities Regulatory Commission (CSRC).

The Chongqing Bureau of the CSRC found that Tiansheng Pharmaceutical and Liu Qun were involved in the following violations:

1. **Overstatement of Total Profits in 2017 and 2018 Annual Reports** Tiansheng Pharmaceutical misappropriated funds through Chongqing Taihong Construction Engineering Co., Ltd. (Taihong) and its wholly-owned subsidiary Chongqing Changsheng Pharmaceutical Co., Ltd. (Changsheng Pharmaceutical) to create off-book capital pools. In its 2017 and 2018 annual reports, the company inflated total profits by RMB 174,783,429.59 and RMB 47,908,869.95, respectively, by using these funds to cover sales expenses. Additionally, it understated total profits by RMB 82,579,175.12 and RMB 19,085,868.44 in the same years by artificially increasing procurement costs for Chinese herbal medicines. Combined, the net overstatement of profits amounted to RMB 92,204,254.47 (30.21% of disclosed profits) in 2017 and RMB 28,823,001.51 (20.61%) in 2018.

2. **Failure to Disclose Related-Party Transactions in 2017 and 2018** Tiansheng Pharmaceutical established and controlled Taihong but failed to consolidate it in financial statements as required. Companies such as Chongqing Wuxiang Decoration Engineering Co., Ltd. and Chongqing Xinbei Decoration Engineering Co., Ltd., controlled by Liu Qun, were undisclosed related parties. Undisclosed related-party transactions totaled RMB 481,025,946.65 (15.08% of net assets) in 2017 and RMB 48,631,061.00 (1.49%) in 2018. Notably, post-IPO undisclosed transactions reached RMB 328,521,817.60 (exceeding 15% of audited net assets and RMB 30 million) by July 24, 2017. These omissions rendered the annual reports materially incomplete.

The Chongqing Bureau ruled that Tiansheng Pharmaceutical violated Article 63 of the 2005 Securities Law by falsifying profits and concealing related-party transactions, constituting misconduct under Article 193. Penalties include corrective orders, warnings, and fines for the company, Liu Qun, and other responsible parties.

Previously, on January 9, 2025, Tiansheng Pharmaceutical disclosed an investigation into information disclosure violations by the CSRC. A preliminary penalty notice followed on September 13, 2025.

Under the Civil Code, Securities Law, and judicial interpretations, investors harmed by fraudulent misrepresentation may claim compensation for losses, including price differentials, commissions, stamp duties, and interest. Affected investors can file lawsuits in competent courts.

Lawyer Song Yixin of Shanghai Hanlian Law Firm is gathering claims from investors who purchased Tiansheng Pharmaceutical securities between April 23, 2018, and January 8, 2025, and sold or held them after January 9, 2025.

**Key Legal Notes:** 1. Claim eligibility may adjust based on final CSRC penalties and court rulings. 2. While direct lawsuits are possible post-regulatory action, penalties remain a critical litigation prerequisite. 3. Delisting does not halt claims but may delay proceedings; bankruptcy (e.g., restructuring) could significantly impact progress. 4. Required documentation for claims includes ID copies, securities account confirmations, and transaction records.

(Professional legal consultation is advised for case-specific guidance.)