The first "illegal reduction" of A-shares after the new regulations: the controlling shareholder of the company is ordered to make corrections
Chinese listed company Dongfang Fashion Driving School Co., Ltd. announced on the 6th that it received a decision from the Beijing Securities Regulatory Bureau to order Dongfang Fashion Investment Co., Ltd. to take corrective measures.
According to the Decision, on August 28th, Dongfang Fashion Investment Co., Ltd. reduced its holdings of 3.4 million shares of Dongfang Fashion through bulk trading, in violation of Article 6 of the Several Provisions on the Reduction of Shares by Shareholders, Directors, Supervisors, and Senior Management of Listed Companies. According to relevant regulations, the Beijing Securities Regulatory Bureau has decided to take regulatory measures to order Oriental Fashion Investment Co., Ltd. to make corrections.
Recently, the controversy over Dongfang Fashion's reduction of holdings has attracted attention, as it is the first illegal reduction in A-shares since the China Securities Regulatory Commission issued new regulations to further regulate the reduction of shares.
On August 27th, the China Securities Regulatory Commission made relevant requirements to further regulate the reduction of shares by relevant parties, including: if a listed company has a situation of breaking through the stock market or net profit, or has not received cash dividends in the past three years, and the cumulative cash dividends are less than 30% of the average net profit in the past three years, the controlling shareholder or actual controller shall not reduce their shares of the company through the secondary market.
However, on August 30th, Dongfang Fashion announced that its controlling shareholder Dongfang Fashion Investment Co., Ltd. had reduced its holdings of 3.4 million shares of Dongfang Fashion through bulk trading on August 28th.
Considering that the stock price of Dongfang Fashion has fallen below the issuance price, the above reduction of shares violates the relevant requirements of the China Securities Regulatory Commission to further regulate the reduction of shares.
Regarding this, Dongfang Fashion stated that the reduction in holdings by Dongfang Fashion Investment Co., Ltd. was due to an inaccurate understanding of the relevant requirements. Dongfang Fashion Investment Co., Ltd. promises to repurchase the reduced shares as soon as possible within the scope allowed by the rules.
On September 6th, Dongfang Fashion also disclosed the progress of repurchasing its reduced shares: Dongfang Fashion Investment Co., Ltd. will repurchase this portion of the reduced shares through self raised funds before September 15th, 2023.
Public information shows that Dongfang Fashion started with driver training, with its main business including motor vehicle driver training and civil aircraft driver training.