Large-scale fund occupation and disclosure violations: Sante Special Ropeway receives a multi-million yuan fine; former actual controller is banned from market participation for life | Quick Read Announcement

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Originally from: Caixin News

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Caixin News, March 29 (reporters Zhang Chenjing and Hu Haoqiong) After a two-year gap, the case involving Sante Cableway (rights protection) (002159.SZ) suspected of violating information disclosure laws and regulations has received a major regulatory “hammer.” Today, Sante Cableway released the “Notice of Advance of Administrative Penalty,” and because it involved not disclosing related-party transaction matters in a timely manner, as well as major omissions in its annual report, the company was fined RMB 10.5 million. In addition, the former actual controller, Ai Minglu, was permanently barred from the securities market.

According to the investigation by the Hubei Securities Regulatory Bureau, the violations by Sante Cableway mainly focused on related-party non-operating funds occupation and violations of information disclosure. Since 2019, due to the capital needs of the indirectly controlling shareholder, the Times Group, Sante Cableway routed funds into the collection entities designated by the Times Group, and ultimately transferred them to the Times Group and its related parties and partners, forming related-party non-operating funds occupation.

Specifically, from August 3, 2020 to December 2020, Sante Cableway failed to disclose in a timely manner the amount of funds transferred to the indirectly controlling shareholder, the Times Group, which was RMB 340 million, accounting for 31.89% of the latest audited net assets. In 2021, Sante Cableway failed to disclose in a timely manner the amount of funds transferred to the Times Group, which was RMB 1.904 billion, accounting for 131.67% of the latest audited net assets. In January 2022, Sante Cableway failed to disclose in a timely manner the amount of funds transferred to the Times Group, which was RMB 500 million, accounting for 34.58% of the latest audited net assets.

At the same time, in 2019, Sante Cableway had non-operating funds occupation with the Times Group with an amount of RMB 1.423 billion, accounting for 133.49% of Sante Cableway’s 2019 net assets. In 2020, the amount of non-operating funds occupation between Sante Cableway and the Times Group was RMB 370 million, accounting for 25.59% of Sante Cableway’s 2020 net assets. Sante Cableway did not disclose it in its 2019 and 2020 annual reports, resulting in major omissions in the annual reports.

For the above-mentioned facts of violations, the Hubei Securities Regulatory Bureau intends to issue Sante Cableway a warning and impose a fine of RMB 10.5 million. It should be noted that the punishment this time for the then actual controller, Ai Minglu, totals RMB 11 million, and other four related responsible persons will also be fined RMB 2.5 million to RMB 4.5 million, respectively.

In the notice letter, the Hubei Securities Regulatory Bureau stated that Ai Minglu instructed Sante Cableway to engage in the relevant illegal activities involved in the case. The conduct was恶劣, the illegal circumstances were serious, and within 5 years it had already adopted securities market ban measures against Ai Minglu. The bureau will impose permanent securities market ban measures on Ai Minglu.

As for the non-operating funds occupation by the former controlling shareholder involved in the “notice letter,” the related principal and interest had all been returned in cash in April 2022. Public information shows that Sante Cableway’s main products are scenic-area transportation-related products primarily based on cableways, and sightseeing products primarily based on natural resources, among others. The company said that this matter does not touch any situation of mandatory delisting for major illegal violations or any other risk warning situations. As of the date of the announcement disclosure, all of the company’s production and operating activities are normal.

(Caixin News reporter Zhang Chenjing)

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