Huarui Holdings Receives Arbitration Result for Performance Commitment Compensation; Former Controlling Shareholder Required to Pay Over 19 Million Yuan

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Huari Electric Co., Ltd. (referred to as “Huari Co.”) announced on March 18 that it recently received a ruling from the China International Economic and Trade Arbitration Commission transferred by its controlling shareholder, Wuzhou Dongtai State-owned Assets Operation Co., Ltd. (“Wuzhou Dongtai”). The ruling pertains to the company’s former controlling shareholder Sun Ruiliang and related personnel Zhang Yijun’s 2023 performance commitment. The arbitration tribunal issued a final ruling requiring Sun Ruiliang and Zhang Yijun to pay the company compensation of 18.8331 million yuan plus corresponding overdue interest, and to bear legal fees, arbitration fees, and other related costs.

The announcement states that according to the previous share transfer agreement, Sun Ruiliang and Zhang Yijun committed that Huari Co.'s existing business would achieve net profits of no less than 25 million yuan, 30 million yuan, and 45 million yuan in 2021, 2022, and 2023 respectively, and that the net cash flow from operating activities each year would not be less than that year’s net profit. Audited data shows that after excluding the impact of new investments, the company’s net profit for 2023 was 13.6115 million yuan, which did not meet the 45 million yuan target. According to the agreement, they are required to compensate 31.3885 million yuan.

In July 2025, Wuzhou Dongtai filed arbitration with the China International Economic and Trade Arbitration Commission regarding this matter. According to the latest ruling, Sun Ruiliang and Zhang Yijun are required to pay Huari Co. compensation of 18.8331 million yuan, with overdue interest calculated at the one-year LPR rate starting from June 14, 2024. Additionally, the two are responsible for legal fees of 192,000 yuan, arbitration fees of 286,490 yuan, and arbitrator fees of 3,270 yuan (after prepayment deduction, the actual amount payable). The amounts are to be paid within twenty days of the ruling date.

It is noteworthy that the announcement also discloses that, as of now, the company has not received the performance commitment compensation payments owed by Sun Ruiliang and Zhang Yijun for 2022 and 2023. The company states it will fulfill its disclosure obligations promptly based on the actual enforcement of the arbitration and the performance of the involved parties, reminding investors to be cautious of investment risks.

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Editor: Xiao Lang Kuai Bao