Two GEM-listed companies will be delisted due to false statements in their periodic reports.

According to the announcement on the evening of March 23, Xiangxue Pharmaceutical (300147) received the "Administrative Penalty Advance Notice" issued by the China Securities Regulatory Commission on March 21. Due to the false records in the company's 2019 annual report, the company's stock trading will be subject to other risk warnings. The company's stock will be suspended for one day from the opening of the market on March 24, and will resume trading from the opening of the market on March 25. The stock name will be changed from "Xiangxue Pharmaceutical" to "ST Xiangxue".

Langyuan Shares (300175) announced on the same day that it had recently received an "Administrative Penalty Advance Notice" issued by the Shandong Securities Regulatory Bureau. Due to false records in the company's 2019 annual report and correction announcement, the Shenzhen Stock Exchange will implement other risk warnings for the company's stock trading, and the stock name will be changed from "Langyuan Shares" to "ST Langyuan". The company's stock will be suspended for one day from the opening of the market on March 24 and will resume trading from the opening of the market on March 25.

It is worth noting that the actual controllers of these two listed companies will also be severely punished.

Xiangxue Pharmaceutical

On September 30, 2024, Xiangxue Pharmaceutical received a "Notice of Case Filing" issued by the China Securities Regulatory Commission. The company and its actual controller Wang Yonghui were suspected of violating laws and regulations on information disclosure. The China Securities Regulatory Commission decided to file a case against the company and Wang Yonghui.

The latest disclosed "Administrative Penalty Advance Notice" shows that Xiangxue Pharmaceutical's 2019 annual report contained false records. In December 2019, Xiangxue Pharmaceutical's five villas on Guangzhou Bio Island were demolished by relevant government departments. Xiangxue Pharmaceutical failed to confirm the losses of the construction projects caused by the demolition of the villas in accordance with regulations, resulting in an inflated profit of 53.8325 million yuan in the 2019 annual report, accounting for 45.98% of the total profit disclosed in the current period. The 2019 annual report contained false records.

In addition, Xiangxue Pharmaceutical failed to disclose the non-operating capital occupation of related parties in accordance with regulations, and there were major omissions in the annual reports from 2016 to 2020. From 2016 to 2020, Xiangxue Pharmaceutical spent money in the name of purchasing trust financial management and cooperative operation of Chinese medicinal materials, and finally transferred it to the controlling shareholder Guangzhou Kunlun Investment Co., Ltd. (hereinafter referred to as Kunlun Investment) and other related parties for related parties to repay loans and acquire equity.

From 2018 to 2020, Xiangxue Pharmaceutical paid the construction fee for Xianglan Guanzhou Hotel on behalf of its related party Guangzhou Xianglan Health Industry Co., Ltd. (formerly known as Guangzhou Union Precision Medical Co., Ltd., hereinafter referred to as Union Precision). The above matters all constitute the occupation of non-operating funds by related parties. From 2016 to 2020, the actual amount of the above non-operating funds occupation was RMB 585 million, RMB 845 million, RMB 1.408 billion, RMB 657 million, and RMB 1.357 billion, respectively. Xiangxue Pharmaceutical did not disclose it in a timely manner as required, nor did it disclose it in the annual reports from 2016 to 2019. It only disclosed the amount of non-operating funds occupation of RMB 1.262 billion in the 2020 annual report.

Through the above-mentioned related transactions, the non-operating capital utilization balance of Xiangxue Pharmaceutical during the same period was RMB 280 million, RMB 686 million, RMB 1.556 billion, RMB 704 million and RMB 959 million, respectively. Xiangxue Pharmaceutical did not disclose it in the annual reports from 2016 to 2019, and only disclosed the utilization balance of RMB 626 million in the 2020 annual report. The difference between the disclosed balance and the actual balance was RMB 332 million.

In accordance with the provisions of Article 197, paragraph 2 of the Securities Law, the Guangdong Securities Regulatory Bureau intends to decide:

1. Guangzhou Xiangxue Pharmaceutical Co., Ltd. was ordered to make corrections, given a warning, and fined RMB 6 million; 2. Wang Yonghui was given a warning and fined RMB 10 million, including a fine of RMB 3 million as the directly responsible supervisor and RMB 7 million as the actual controller; 3. Lu Feng was given a warning and fined RMB 2 million; 4. Huang Bin and Xu Li were given a warning and fined RMB 1 million each; 5. Hao Shiming was given a warning and fined RMB 500,000. In addition, the Guangdong Securities Regulatory Bureau intends to give Chen Binghua a warning and impose a fine of RMB 150,000.

At the same time, the Guangdong Securities Regulatory Bureau plans to impose a five-year market ban on Wang Yonghui.

Xiangxue Pharmaceutical said that the above-mentioned behavior did not involve the situation of major illegal forced delisting. The company and relevant responsible persons will deeply reflect and learn lessons, conduct in-depth analysis and actively rectify previous historical violations, and prevent such incidents from happening again.

Langyuan Shares

On September 13, 2024, Langyuan Co., Ltd. received a "Notice of Case Filing" issued by the China Securities Regulatory Commission. Due to suspected violations of laws and regulations on information disclosure, the China Securities Regulatory Commission decided to file a case against the company.

Langyuan Shares and relevant responsible persons recently received the "Administrative Penalty Advance Notice" issued by the Shandong Securities Regulatory Bureau. After investigation, the facts suspected of illegal activities of Langyuan Shares are as follows:

In December 2018, Langyuan Co., Ltd. acquired 51% of the equity of Guangdong Youshi United Holding Group Co., Ltd. (hereinafter referred to as Guangdong Youshi) and included it in the scope of consolidated financial statements. In 2019, in order to fulfill its performance commitments, Guangdong Youshi inflated its operating income, operating costs and profits by signing purchase and sales contracts without commercial substance and fabricating third-party business, resulting in Langyuan Co., Ltd.'s operating income, operating costs and total profits in 2019 being inflated by 52.5069 million yuan, 34.9431 million yuan and 18.1660 million yuan, respectively, accounting for 9.03%, 7.94% and 43.02% of the absolute value of the corresponding items disclosed in the current period.

On September 25, 2020, Langyuan Co., Ltd. issued a correction announcement, reducing some of the inflated operating income, operating costs and profits of Guangdong Youshi. However, after the adjustment, Langyuan Co., Ltd.'s 2019 operating income, operating costs and total profits were still inflated by 37.8809 million yuan, 227 million yuan and 11.2504 million yuan, respectively, accounting for 6.68%, 6.17% and 26.91% of the absolute value of the corresponding items disclosed in the current period.

The Shandong Securities Regulatory Bureau pointed out that Zhang Tao was the general manager of Langyuan Co., Ltd. and the chairman of Guangdong Youshi at the time. He was responsible for the operation and management of Guangdong Youshi, organized and implemented the financial fraud of Guangdong Youshi, and was the supervisor directly responsible for the above-mentioned illegal acts of Langyuan Co., Ltd. Qi Yongmao was the chairman of Langyuan Co., Ltd. and the director of Guangdong Youshi at the time. He was responsible for the overall management of the company and failed to take effective measures to strengthen the control and management of Guangdong Youshi. He was the supervisor directly responsible for the above-mentioned illegal acts of Langyuan Co., Ltd.

Zhang Lina was the director, deputy general manager, and financial director of Langyuan Co., Ltd., and the director of Guangdong Youshi, responsible for the company's financial work. She failed to perform her duties effectively and take measures to improve the basic financial accounting work of Guangdong Youshi. She is the other person directly responsible for the above-mentioned illegal acts of Langyuan Co., Ltd. Li Bo was the deputy general manager and secretary of the board of directors of Langyuan Co., Ltd., and the supervisor of Guangdong Youshi. He was responsible for organizing and coordinating the company's information disclosure affairs, and is the other person directly responsible for the above-mentioned illegal acts of Langyuan Co., Ltd.

The Shandong Securities Regulatory Bureau intends to decide:

1. Give a warning to Langyuan Co., Ltd. and impose a fine of 5 million yuan; 2. Give a warning to Zhang Tao and impose a fine of 2 million yuan; 3. Give a warning to Qi Yongmao and impose a fine of 2 million yuan; 4. Give a warning to Zhang Lina and impose a fine of 1 million yuan; 5. Give a warning to Li Bo and impose a fine of 500,000 yuan.

Among them, the illegal behavior of the party Zhang Tao is relatively serious, and the illegal behavior of Qi Yongmao is serious. The Shandong Securities Regulatory Bureau intends to decide: to ban Zhang Tao from the securities market for 10 years and to ban Qi Yongmao from the securities market for 5 years.