IPO Observation: Jiantong Electric Control Still Has Not Completed Registration After Over 7 Months, and Former Partner Was "Forged Signature" Kicked Out
On April 19, 2023, Wuhan Jiantong Automobile Electric Control System Co., Ltd. (hereinafter referred to as "Jiantong Electric Control") successfully passed the review by the Shanghai Stock Exchange's Star Market. However, after seven months have passed, Jiantong Electric Control has not yet submitted its registration documents.
During the review meeting, Jiantong Electric Control's debt issues and shareholder disputes were the main focus of inquiry. In fact, Jiantong Electric Control had previously been punished by a court for forging signatures and lost equity and interest due to this incident.
However, it seems that the requests made by Wan Xun, one of the parties involved in the dispute, have not been fully supported, prompting him to file a lawsuit with the Wuhan Intermediate People's Court of Hubei Province. As of the date of filing, the case has yet to be heard.
As stated in the prospectus
In the prospectus, Jiantong Electric Control and Wan Xun's dispute over the equity transfer was listed as "other major events that may have a significant impact on the issuer", namely the disagreement between Wan Xun and Jiantong Limited, Jiantong Components Co., Ltd., Wu Xiaojun, and Wang Mingdao regarding the acquisition of Jiantong Components Co., Ltd. by Jiantong Limited in 2014.
On November 3, 2019, Wan Xun filed a lawsuit with the Wuhan Intermediate People's Court of Hubei Province, requesting that Jiantong Electric Control and Wang Mingdao jointly compensate him for losses totaling 2857.38 million yuan, including interest at an annual rate of 5.40%, as well as fees.
On December 31, 2021, the Wuhan Intermediate People's Court of Hubei Province issued a verdict, ruling that Jiantong Electric Control and Wang Mingdao should jointly compensate Wan Xun for losses totaling 1095.60 million yuan, including interest, and pay fees; meanwhile, Wan Xun's other requests were rejected.
Due to the agreement between Jiantong Electric Control and Jiantong Investment dated December 10, 2018, Jiantong Electric Control has assumed the obligation to compensate Wan Xun for the transfer of equity in Jiantong Components Co., Ltd. valued at 6.64% of the total shares, which was previously held by Wan Xun.
According to the agreement, Jiantong Investment paid Wan Xun all outstanding compensation and interest on April 1, 2022.
However, Wan Xun has once again filed a lawsuit with the Wuhan Intermediate People's Court of Hubei Province, requesting that Jiantong Electric Control and Wang Mingdao jointly compensate him for losses totaling 1761.78 million yuan, including interest, and pay fees.
As stated in the verdict
The equity dispute case has been briefly introduced in Jiantong Electric Control's prospectus in chronological order, but in the court's verdict, this equity dispute presents a different story.
According to the judgment, Wan Xun and Wuhan Jiantong Automobile Electric Control System Co., Ltd. established a Sino-foreign joint venture, Wuhan Jiantong Components Co., Ltd., on May 20, 1998, with Wan Xun holding 35% of the shares.
On April 2, 2014, the board of directors of Wuhan Jiantong Components Co., Ltd. confirmed that after the equity transfer, Wan Xun held a 6.64% stake in the company, and he performed the necessary procedures at the Administration for Industry and Commerce.
Interestingly, Wan Xun discovered through an inquiry with the Wuhan Municipal Bureau of Administration that on November 18, 2014, Wan Xun signed an agreement with Jiantong Company to transfer his 6.64% stake in Wuhan Jiantong Components Co., Ltd. for 1095.6 million yuan and performed the necessary procedures.
However, Wan Xun did not recognize this agreement. On December 3, 2018, Wan Xun reported to the Wuhan Public Security Bureau's Economic Development Zone Branch Office that his 6.64% stake in Wuhan Jiantong Components Co., Ltd. had been illegally transferred and requested an investigation.
On December 24, the Wuhan Municipal Forensic Center issued a verification report stating that the signature on the agreement was not Wan Xun's genuine signature. This means that the equity transfer was "forged signatures".
During the first-instance trial, Jiantong Electric Control also confirmed that the signature on the agreement was not Wan Xun's genuine signature and had never paid Wan Xun the agreed-upon compensation.
Following the first-instance judgment, Jiantong Electric Control appealed. In the second instance, the court upheld the first-instance judgment. From then on, the equity dispute's true story emerged – a hard-to-accept scenario of "forged signatures" kicking out a partner.
As of now, Jiantong Electric Control has paid compensation to Wan Xun for losses and interest in accordance with the verdict [2019] 鄂01民初8088号. Wan Xun has appealed again, and the final outcome is still uncertain. From a process perspective, the drama between shareholders is indeed heartbreaking.