Due to the inflated project income and cost of Hangzhou Zhongyi Company, a wholly-owned subsidiary of Xingyuan Environment (300266), Xingyuan Environment was punished for false records in the financial data of the 16th to 22nd annual reports.
According to Xingyuan Environment's previous announcements, Hangzhou Zhongyi's motive for fraud stemmed from the performance VAM promise when it was acquired.
In February 2016, when Xingyuan Environment acquired Hangzhou Zhongyi, the seven original shareholders of Hangzhou Zhongyi signed a VAM agreement with Xingyuan Environment, and promised to deduct non-profits from Hangzhou Zhongyi in 15-17 years. According to the corrected data of the accounting error, Hangzhou Zhongyi 16 and 17 did not complete the performance commitment indicators, but there is uncertainty about the amount of compensation for recovering the performance commitment, so there is also uncertainty about the impact of this matter on Xingyuan Environment's profits.
It is worth noting that the punishment was only imposed on Xingyuan Environment and its chief financial officer, and not on other directors, supervisors and senior executives, because all of them had left their posts and the statute of limitations for administrative penalties had expired. The author believes that it is untenable not to punish because of resignation, but it is true that no more punishment can be imposed after the statute of limitations, because if the illegal act is not discovered within two years, it can no longer be punished. However, the expiration of the statute of limitations does not affect the compensation from shareholders against these directors, supervisors and senior executives.
To sum up, the author's team has judged that inyearsmonthDay 202yearsmonthday (and including)**, and on 202yearsJanuary 1Sell or hold after the date (including the current day).Xingyuan Environmentof investorsClaims can be initiated.
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