Beijing Stock Exchange-listed *ST Guangdao (Stock Code: 920680) announced on the evening of November 12 that it had received the "Decision on the Termination of Listing of Shenzhen Guangdao Digital Technology Co., Ltd." from the exchange, which ruled to delist the company’s shares. The delisting is linked to *ST Guangdao’s prolonged and systematic financial fraud.
A "Penalty Decision" issued by the Shenzhen Regulatory Bureau of the China Securities Regulatory Commission (CSRC) on September 12 confirmed that *ST Guangdao’s annual reports from 2018 to 2023, its 2024 interim report, and its "2024 Private Placement Prospectus (Draft)" contained false records. This constitutes a major violation under Article 10.5.1(7) of the Beijing Stock Exchange Listing Rules, triggering mandatory delisting.
Specifically, *ST Guangdao fabricated sales and procurement transactions by falsifying contracts, invoices, bank receipts, delivery notices, and warehouse records, thereby inflating revenue and costs. From 2018 to 2023 and the first half of 2024, the company’s inflated revenue accounted for 87.34%, 95.39%, 98.96%, 85.87%, 99.39%, 98.14%, and 88.11% of the reported figures, respectively. Similarly, inflated costs represented 84.53%, 91.17%, 98.41%, 83.30%, 99.13%, 92.26%, and 83.81% of the stated amounts.
Per the CSRC’s penalty decision, *ST Guangdao was ordered to rectify its practices, given a formal warning, and fined RMB 10 million. Key executives, including then-Chairman, General Manager, controlling shareholder, and de facto controller Jin Wenming, as well as then-Director, Deputy General Manager, CFO, and Board Secretary Zhao Lu, were identified as primarily responsible and faced severe administrative penalties and market bans.
*ST Guangdao, formally known as Shenzhen Guangdao Digital Technology Co., Ltd., primarily develops and sells data application-oriented software products. It listed on the New Third Board in November 2016 and debuted on the Beijing Stock Exchange on November 15, 2021, with Minmetals Securities as its sponsor.
In a recent announcement, *ST Guangdao noted that Minmetals Securities is leading efforts to establish a compensation fund for eligible investors affected by the fraud. Trading of *ST Guangdao shares has been suspended since September 15. As of September 12, its stock closed at RMB 9.52 per share, with a total market cap of RMB 638 million.
The incident underscores the increasing diversity of delisting mechanisms in China’s A-share market, reflecting regulatory efforts to combat violations and protect investors. Proactive and mandatory delistings are rising, with multiple companies delisted this year due to severe financial fraud. Authorities emphasize that delisting does not exempt firms from accountability, as post-delisting investigations and penalties continue to uphold market integrity.
Looking ahead, further improvements in delisting mechanisms, stricter oversight, and enhanced investor compensation frameworks are expected to channel resources toward competitive firms, curbing the "bad money drives out good" phenomenon.