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Fraud investigation casts shadow on Baling IPO
By Lydia Chen |
November 4, 2011, Friday
|
Online Edition
Online Edition
THE chairman of the soon-to-be-listed Nanning Baling Technology Inc is reportedly being investigated for alleged embezzlement, which could cast more shadows on the future market performance of the troubled heat exchanger producer.
Police in Guangxi Zhuang Autonomous Region has already built a case against Baling Chairman Gu Yu after two years of preparation, news reports stated today.
The investigations followed appeals from company staff who accused Gu of abusing his position and forcing them to hand over their shareholders' rights to him, Shenzhen TV station cited a police document as saying today.
The staff also claimed that Gu had barred them from attending shareholders' meetings, embezzled the company's assets and stole shares that did not belong to him, according to the report.
Baling reshuffled its share structure twice in 2007 and 2008, resulting in only 26 of its over 200 employees being recognized as company shareholders, while a nearly 5.04 million shares were left as "extra shares" not belonging to anyone.
It is unclear if Baling's initial public offering, set to debut this month, will be affected by the investigation against Gu. According to Chinese securities regulations, board members and senior executives of to-be-listed firms should not be involved in any police investigations and crimes.
But the regulation doesn't specify what the punishments will be.
Baling received a green light from China's top securities supervisor in April to issue shares in the Chinese mainland. But in June, it became the first firm in the history of mainland stock markets to be forced to call off its IPO for not getting enough institutional investors.
In October, after changing its accounting firm, Baling got IPO approval from the China Securities Regulatory Commission for a second time, which meant it could restart the postponed IPO process.
The firm is expected to raise 29.78 million yuan (US$4.71 million) by selling 189 million shares on the small-and-medium-sized enterprise board in Shenzhen this month at an issue price of 17.11 per share. The price is in sharp contrast to a median price estimate of 36.92 yuan per share given by Baling's underwriter Minsheng Securities back in April.
Calls to Baling all went unanswered while Li Min, a lawyer who's responsible for Baling's IPO, declined an interview with China.com today.
Police in Guangxi Zhuang Autonomous Region has already built a case against Baling Chairman Gu Yu after two years of preparation, news reports stated today.
The investigations followed appeals from company staff who accused Gu of abusing his position and forcing them to hand over their shareholders' rights to him, Shenzhen TV station cited a police document as saying today.
The staff also claimed that Gu had barred them from attending shareholders' meetings, embezzled the company's assets and stole shares that did not belong to him, according to the report.
Baling reshuffled its share structure twice in 2007 and 2008, resulting in only 26 of its over 200 employees being recognized as company shareholders, while a nearly 5.04 million shares were left as "extra shares" not belonging to anyone.
It is unclear if Baling's initial public offering, set to debut this month, will be affected by the investigation against Gu. According to Chinese securities regulations, board members and senior executives of to-be-listed firms should not be involved in any police investigations and crimes.
But the regulation doesn't specify what the punishments will be.
Baling received a green light from China's top securities supervisor in April to issue shares in the Chinese mainland. But in June, it became the first firm in the history of mainland stock markets to be forced to call off its IPO for not getting enough institutional investors.
In October, after changing its accounting firm, Baling got IPO approval from the China Securities Regulatory Commission for a second time, which meant it could restart the postponed IPO process.
The firm is expected to raise 29.78 million yuan (US$4.71 million) by selling 189 million shares on the small-and-medium-sized enterprise board in Shenzhen this month at an issue price of 17.11 per share. The price is in sharp contrast to a median price estimate of 36.92 yuan per share given by Baling's underwriter Minsheng Securities back in April.
Calls to Baling all went unanswered while Li Min, a lawyer who's responsible for Baling's IPO, declined an interview with China.com today.
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