Jiu Rong Holdings Limited (stock code: 2358) released an announcement detailing a series of share purchases and disposals involving Xiangcai Co., Ltd. (listed on the Shanghai Stock Exchange, stock code: 600095), resulting in both a Very Substantial Acquisition and a Very Substantial Disposal under Chapter 14 of the Listing Rules. The Board identified that the required reporting, announcement, and shareholders’ approval under the Listing Rules had not been duly followed.

During the period from 9 June 2022 to 27 April 2023, Jiu Rong Holdings purchased 20,557,355 shares of Xiangcai on the Shanghai Stock Exchange at prices ranging from RMB 6.31 to RMB 10.59 per share, with total consideration of approximately RMB 172.4 million.

From 8 June 2022 to 28 April 2023, the company disposed of 30,517,514 Xiangcai shares through open market transactions at prices ranging from RMB 6.52 to RMB 10.90 per share, for total proceeds of approximately RMB 256.1 million. Factoring in an earlier subscription of 9,960,159 Xiangcai shares in 2021, Jiu Rong Holdings reported an overall net loss of around RMB 15.1 million from these disposals. Within these transactions, some purchases and disposals generated gains, while the shares originally subscribed in 2021 contributed to an overall loss of approximately RMB 21.3 million.

According to the announcement, the former executive Directors authorized the share purchases and disposals without fully reporting to the Board. Consequently, the company did not comply with the notifiable transaction requirements under Chapter 14 of the Listing Rules at the time. The Board has confirmed that these transactions cannot be unwound and has, after careful consideration, decided against convening a shareholders’ meeting to ratify the past transactions.

Jiu Rong Holdings has since undertaken remedial measures, including a thorough review of internal protocols, the strengthening of transaction reporting procedures, and the engagement of an independent internal control adviser to ensure future compliance. Additional internal control and corporate governance training has also been introduced for Directors, senior management, and relevant staff.

As disclosed in the announcement, Xiangcai reported audited revenue of approximately RMB 3,516 million for the year ended 31 December 2022, with a net loss after tax of around RMB 328 million. For the year ended 31 December 2021, it recorded revenue of approximately RMB 4,571 million and a net profit after tax of around RMB 488 million.

Jiu Rong Holdings indicated that it has fully divested its interest in Xiangcai since 28 April 2023 and has not engaged in further trading of listed securities aside from divestments disclosed in subsequent announcements. The company has reiterated its commitment to maintaining effective internal controls and complying with the Listing Rules going forward.