*ST Changfang (300301.SZ) received an administrative penalty decision from the Shenzhen Securities Regulatory Bureau

Zhitong Finance App News, *ST Changfang (300301.SZ) announced that the company and relevant parties received the “Administrative Penalty Decision” issued by the Shenzhen Securities Regulatory Bureau and the “Decision on Imposing Disciplinary Actions such as Public Approval to Shenzhen Changfang Group Co., Ltd. and related parties” issued by the Shenzhen Stock Exchange.

According to the announcement, in April 2015, Changfang Group purchased 60% of Kang Mingsheng's shares held by Li Di Elementary through cash payments and issuance of shares. As a subsidiary of Changfang Group, Kang Mingsheng is included in the scope of Changfang Group's consolidated statements. On December 8, 2017, Changfang Group signed a “Share Transfer Agreement” with 29 natural person shareholders including Li Dichu, Nie Wei, Peng Lixin, and Xiao Yefang to purchase 35.7454% of Kang Mingsheng's shares in cash. Li Dichu, Nie Wei, Peng Lixin, Xiao Yefang and others promised that Kangsheng's net profit in 2018, 2019 and 2020 will not be less than 125 million yuan, 140 million yuan, and 155 million yuan. Kang Mingsheng inflated profits and accounts receivable through methods such as not recording sales rebates; in 2020, Kang Mingsheng reduced the expenses generated by sales rebates by 7.977,800 yuan and inflated profit by 7.9777,800 yuan, accounting for 54.90% of the absolute value of Changfang Group's total current profit. As of December 31, 2020, Kang Mingsheng had inflated accounts receivable by 148 million yuan, accounting for 5.40% of Changfang Group's total assets disclosed in the current period. In 2021, Kang Mingsheng generated sales expenses of 5.4873 million yuan and inflated profit of 5.4873 million yuan, accounting for 2.02% of Changfang Group's total current profit. As of December 31, 2021, Kang Mingsheng had inflated accounts receivable by 158 million yuan, accounting for 9.31% of the total assets disclosed by Changfang Group in the current period.

Li Dichu was the vice chairman of Changfang Group from July 2018 to May 2020, and was the executive director of Kang Mingsheng at the time. He was responsible for the overall operation and management of Kang Mingsheng, directly responsible for financial fraud implementation departments such as the finance department and domestic business department, and should be responsible for related financial fraud; Peng Lixin was Kang Mingsheng's financial director at the time, aware that some sales rebates were not recorded, and the amount stated in the annual review certificate did not match the actual amount, and should also be responsible for related financial fraud. Nie Wei and Xiao Yefang were the general manager of Kang Mingsheng and the director of the domestic business department at the time, respectively, and participated in the execution of financial fraud. Although the four did not hold positions as directors, supervisors, or senior managers of the listed company, their actions had a direct causal relationship with the listed company's illegal disclosure of information. Li Di Chu is the supervisor directly responsible, while Peng Lixin, Nie Wei, and Xiao Yefang are the other directly responsible personnel.

Wang Min was the chairman of Changfang Group at the time. Since Changfang Group lost control of Kang Mingsheng, he was unable to effectively resolve relevant control issues. He signed to guarantee that the 2020 and 2021 annual reports of Changfang Group were true, accurate, complete, and not diligent and conscientious. He was the supervisor directly responsible for the company's illegal disclosure of information. Liu Zhigang was the general manager of Changfang Group at the time, and Jiang Wei was the deputy general manager, financial director, and secretary of the board of directors of Changfang Group. The two failed to effectively work together to resolve Kang Mingsheng's related control issues and signed to ensure that the 2020 and 2021 annual reports of Changfang Group were true, accurate, and complete. They were the other persons directly responsible for the company's illegal disclosure of information. Liang Dicheng was the director of Changfang Group at the time, ensuring that the 2020 and 2021 annual reports of Changfang Group are true, accurate and complete; Rao Fenming was the deputy general manager of Changfang Group at the time to ensure that the 2020 annual report of Changfang Group was true, accurate and complete. The two knew that Kang Mingsheng had long-term management problems and was not diligent and conscientious, and were other directly responsible personnel.

The Shenzhen Securities Regulatory Bureau decided to give a warning and fine of 4 million yuan to Shenzhen Changfang Group Co., Ltd.; give a warning and fine of 5 million yuan to Li Dichu; give a warning to Nie Wei and Peng Lixin, and fine 3 million yuan each; give a warning to Wang Min and Xiao Yefang, and fine 2.5 million yuan each; give a warning to Liu Zhigang and Jiang Wei, and fine them 1 million yuan each.

The Shenzhen Stock Exchange issued a disciplinary decision: Li Dichu, then vice chairman of Shenzhen Changfang Group Co., Ltd., and the then executive director of Changfang Group Kang Mingsheng (Shenzhen) Technology Co., Ltd. was publicly determined to be unfit to serve as a director, supervisor, and senior manager of a listed company for five years. A public reprimand was imposed on Shenzhen Changfang Group Co., Ltd. Li Dichu, then vice chairman of Shenzhen Changfang Group Co., Ltd., then executive director of Changfang Group Kang Mingsheng (Shenzhen) Technology Co., Ltd., Nie Wei, then general manager of Changfang Group Kang Mingsheng (Shenzhen) Technology Co., Ltd., Peng Lixin, then financial director, Xiao Yefang, then domestic division director, Wang Min, then general manager, Liu Zhigang, and then-deputy general manager, were publicly condemned.