Golden Sun and several executives receive a warning letter from the Guangdong Securities Regulatory Bureau for multiple violations, including financial accounting and other issues.

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Dongguan Jintaiyang Grinding Co., Ltd. (stock code: 300606, stock abbreviation: Jintaiyang) recently announced that the company, along with Chairman Yang Lu, actual controller Hu Xiuying, Director and Deputy General Manager Yang Wei, former Chief Financial Officer Zhu Yuanji, and Board Secretary Du Yanyan, have recently received a “Warning Letter” issued by the Guangdong Regulatory Bureau of the China Securities Regulatory Commission due to multiple violations, including inaccurate accounts receivable accounting, non-operational fund occupation by the actual controller, failure to timely review and disclose certain related party transactions, and non-compliance in insider information management.

According to the on-site inspection by the Guangdong Securities Regulatory Bureau, the violations by Jintaiyang are mainly reflected in four aspects. First, accounts receivable accounting is inaccurate, and bad debt provisions are insufficient. The company’s client, Chongqing Tongnan District Tongding Electronic Technology Co., Ltd., has multiple payment funds associated with Jintaiyang, including part of the payments from Jintaiyang, mainly from financing leasing payments guaranteed by Jintaiyang, and the source of repayment funds for the financing lease is closely related to the company’s actual controller. The related accounts receivable risk is still primarily borne by the company, but the company has ceased to recognize the relevant accounts receivable and has not provided for bad debt, leading to inaccurate financial data in the 2023 annual report.

Second, non-operational fund occupation by the actual controller. Between 2020 and 2021, Jintaiyang transferred funds from the company’s account to suppliers in the name of advance payments, among which 19 million yuan (9 million yuan in 2020 and 10 million yuan in 2021) was ultimately used to repay the pledged loans of the actual controllers Yang Lu and Hu Xiuying through accounts controlled by relatives of the actual controller, constituting non-operational fund occupation by the actual controller, and failing to fulfill the obligations of review and information disclosure.

Third, some related party transactions were not timely reviewed and disclosed. On one hand, the company’s client Kaifeng Liyan Polishing Materials Co., Ltd. primarily sourced its operating funds from Jintaiyang’s advance payments in 2022 and 2023, and there were substantial financial transactions with the company’s directors and senior executives, resulting in employees being mixed with the company, which should be recognized as related parties. The related transactions constituted related party transactions but were not reviewed and disclosed; the procurement amounts for 2022 and 2023 were 27.5051 million yuan and 10.3848 million yuan, accounting for 4.59% and 1.48% of the corresponding year’s net assets, respectively. On the other hand, the general manager of the company’s subsidiary, Liu Chun, has served as the executive director and manager of the client Foshan Rui Grinding Materials Co., Ltd. since November 2021. The company has recognized this client as a related party in 2023 but did not identify it as such in 2022, and the related party transactions were not reviewed and disclosed. The sales amount to this client in 2022 was 28.8519 million yuan, accounting for 4.82% of the annual net assets.

Fourth, insider information management is not standardized. In the registration of the 2021 annual report matters, the date of awareness for the audit firm personnel and the financial responsible person was later than the actual date of awareness, resulting in inaccurate registration; in the insider information knowledge person files for 2021 and 2022, the relevant personnel did not sign to confirm.

The Guangdong Securities Regulatory Bureau pointed out that Yang Lu, as the actual controller, chairman, and general manager of the company, holds primary responsibility for all violations; Hu Xiuying, as the actual controller, holds primary responsibility for the second violation; Yang Wei, as a director and deputy general manager of the company handling the related transactions, holds primary responsibility for the first, second, and third violations; Zhu Yuanji, as the then chief financial officer, holds primary responsibility for the first, second, and third violations; Du Yanyan, as the board secretary, holds primary responsibility for the second, third, and fourth violations. According to relevant regulations, the Guangdong Securities Regulatory Bureau has decided to issue a warning letter as an administrative regulatory measure to the company and the aforementioned individuals and requires the company to submit a report on rectification and internal accountability to the Guangdong Securities Regulatory Bureau within 30 days of receiving the decision document.

Jintaiyang stated that the company and the relevant personnel highly value the issues pointed out in the “Warning Letter,” will reflect deeply and actively rectify as required, and submit a written report on rectification and internal accountability. The company’s directors and senior management will earnestly fulfill their due diligence obligations and improve the quality of information disclosure. This administrative regulatory measure will not affect the company’s normal operational management activities.

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Editor: Xiaolang Express News