Zongheng Co., Ltd. (688070.HK) SH) The actual controller Ren Bin was sentenced to the first instance of the divorce dispute lawsuit, and 12.3 million shares of the company belonged to Kuang Mingfang.

The break-up fee is 400 million yuan

On January 16, Zongheng Co., Ltd. issued an announcement that Ren Bin, the controlling shareholder and actual controller, was sentenced to divide the company's shares due to a personal divorce dispute. According to the first-instance judgment of the Sichuan Tianfu New District People's Court, 12.3 million of the 20.5 million shares held by Ren Bin belonged to Kuang Mingfang. Ren Bin is required to assist in the transfer of ownership within 10 days after the judgment takes effect.

Based on the closing price of 35.20 yuan per share on January 16, the value of the shares that Ren Bin is about to transfer is about 433 million yuan.

It is understood that on February 26, 2024, Zongheng Co., Ltd. received a notice from Ren Bin, the actual controller, that he received the "Notice of Response to the People's Court of Sichuan Tianfu New Area", and his spouse Kuang Mingfang filed a lawsuit with the People's Court of Sichuan Tianfu New Area as the plaintiff, requesting a divorce and division of his family property, including the company's equity.

After nearly a year of litigation, the first-instance judgment granted Kuang Mingfang and Ren Bin a divorce and granted Kuang Mingfang's litigation request.

However, the case is still in the judgment appeal period, and Ren Bin said that he will file an appeal, and the final outcome of the lawsuit is still uncertain, which may lead to a change in the proportion of equity held by Ren Bin.

Divorce does not affect the actual controller

According to the third quarter report of 2024, Ren Bin, as the largest shareholder of Zongheng Co., Ltd., directly holds 23.41% of the company's shares; Ren Bin is the executive partner of Hainan Yongxin Dapeng Enterprise Management Center (Limited Partnership) (hereinafter referred to as Yongxin Dapeng), and the 2024 semi-annual report of Zongheng Co., Ltd. shows that Ren Bin can control 10.18% of the shares held by Yongxin Dapeng.

In addition, on November 16, 2019 and May 25, 2020, respectively, Ren Bin, Wang Chen and Chen Peng, shareholders of Zongheng Co., Ltd., signed the "Persons Acting in Concert" and its supplementary agreement, stipulating that the parties to the agreement shall promptly notify the other parties and reach a consensus before making an expression of intent to exercise relevant voting rights, decision-making rights or put forward proposals; If the parties cannot reach an agreement on the same matter, Ren Bin's opinion on the pending matter shall prevail. Therefore, Ren Bin was able to control 15.61% and 6.89% of the company's shares held by Wang Chen and Chen Peng respectively.

In summary, Ren Bin controls a total of 56.09% of the shares of Zongheng and is the actual controller of Zongheng shares.

In this regard, the announcement shows that according to the calculation of the first-instance judgment, combined with the concerted action agreement between Ren Bin and shareholders Wang Chen and Chen Peng, it is expected that this lawsuit will not have a significant impact on the actual control of Zongheng shares.

The announcement also shows that the company is completely separated from the controlling shareholder and actual controller Ren Bin in terms of assets, and has independent and complete assets, business and independent operation capabilities. The litigation matters involved in the controlling shareholder and actual controller of the company will not have a significant impact on the production and operation of Zongheng Co., Ltd., and the production and operation are normal.

(Disclaimer: The content of this article is for reference only and does not constitute investment advice.) Investors act accordingly at their own risk. ）