Modern Avenue Fashion Group Co., Ltd. (hereinafter referred to as “Modern Avenue”), a local high-end men’s clothing listed company specializing in the Kanudi Road brand, was previously investigated by the China Securities Regulatory Commission for suspected violations of information disclosure regulations, 1 An announcement was issued on the evening of January 17. On January 17, the company and relevant parties received the “Administrative Penalty Decision” issued by the Guangdong Supervision Bureau of the China Securities Regulatory Commission.
The “Advance Notification of Administrative Punishment” shows that after investigation, the main facts of the relevant parties’ illegal violations are as follows:
1. Failure to disclose external guarantees in a timely manner, and there are major omissions in the disclosure of relevant information in regular reports
From April 2018 to January 2019, Modern Avenue failed to perform the approval procedures as required and provided joint and several guarantees to Lin Yongfei and other related parties in the name of a listed company or subsidiary in 5 cases. Among them: the cumulative amount of illegal external guarantees in the first half of 2018 was 219.285 million yuan, accounting for 9.28% of the latest audited net assets; the cumulative amount of illegal external guarantees in 2018 was 319.285 million yuan, accounting for 13.41% of the current audited net assets; in 2019 The total amount of illegal external guarantees in the first half of the year was 469.285 million yuan, accounting for 19.7% of the latest audited net assets.
According to the provisions of Article 30, Paragraph 2, Item 17 of the “Measures for the Administration of Information Disclosure of Listed Companies” and with reference to the requirements of 9.11 of the “Shenzhen Stock Exchange Stock Listing Rules”, listed companies should promptly disclose the provision of guarantees to external parties. Modern Avenue failed to disclose this major incident in a timely manner.
According to Item 2 of Article 41 of the “Guidelines for Information Disclosure Content and Format of Companies that Publicly Offer Securities No. 2 – Content and Format of Annual Reports” (China Securities Regulatory Commission Announcement [2017] No. 17), “Companies that publicly offer securities Information Disclosure Content and Format Guidelines No. 3—Content and Format of Semi-annual Reports” (CSRC Announcement [2017] No. 18) stipulates that listed companies shall disclose significant information in their periodic reports. Guarantee situation. Modern Avenue’s 2018 semi-annual report and 2018 annual report did not disclose external guarantees as required. The 2019 semi-annual report only disclosed two of the guarantees, involving a total guarantee amount of 200 million yuan, and did not disclose the remaining three guarantees. Related periodic reports There are significant omissions.
2. Failure to disclose in regular reports related transactions involving funds occupied by controlling shareholders for non-operating purposes
From December 2018 to August 2019, Modern Avenue paid prepayments without decision-making approval or authorization procedures.
In the form of accounts, prepaid investment funds, prepaid project funds, cash mixed management, etc., through the accounts of suppliers, franchisees, etc., the company has cumulatively provided approximately approximately non-operating funds to the controlling shareholder Guangzhou Ruifeng Group Co., Ltd. (hereinafter referred to as Ruifeng Group) 246.9121 million yuan was used to repay loans, borrow or invest in its subsidiaries, make other equity investments, and pay Ruifeng Group’s daily expenses or wages, etc.
As of the end of 2018, the non-operating funds occupied by related parties of Modern Avenue totaled 150.9983 million yuan, accounting for 6.34% of the current audited net assets; as of the end of June 2019, the non-operating funds occupied by related parties of Modern Avenue totaled 243.791 million yuan. Accounting for 10.24% of the latest audited net assets. According to the provisions of Articles 31 and 40 of the “No. 2 Standards on the Content and Format of Information Disclosure by Companies that Publicly Offer Securities – Content and Format of Annual Reports” (China Securities Regulatory Commission Announcement [2017] No. 17), “Public According to Article 38 of the Guidelines on the Content and Format of Information Disclosure by Companies Issuing Securities No. 3 – Content and Format of Semi-annual Reports (China Securities Regulatory Commission Announcement [2017] No. 18), listed companies shall disclose related parties in their periodic reports. Related party transactions involving funds occupied by the other party for non-operating purposes. Modern Avenue’s 2018 annual report and 2019 semi-annual report did not disclose the related-party transactions of non-operating funds occupied by the above-mentioned related parties, and there were major omissions.
The Guangdong Supervision Bureau of the China Securities Regulatory Commission believes that:
Modern Avenue failed to disclose external guarantees and related transactions of non-operating funds occupied by controlling shareholders as required, resulting in major omissions in relevant periodic reports, and was suspected of violating Articles 63 and 67 of the 2005 Securities Law. The provisions constitute an illegal situation mentioned in paragraph 1 of Article 193 of the 2005 Securities Law. The person directly responsible is Lin Yongfei, and the other directly responsible persons are Weng Wuqiang and Liu Wenyan. The actual controller Lin Yongfei instigated the aforementioned behavior, which constituted the illegal situation described in paragraph 3 of Article 193 of the 2005 Securities Law.
The party involved, Modern Avenue, made the following statements and defenses, requesting a lighter punishment: First, there was no subjective intention or illegal conspiracy on the part of the company, and the relevant information disclosure violations were all caused by Lin Yongfei’s personal behavior; second, after the company became aware of the information disclosure violations involved in the case, , has corrected and disclosed these matters, impacts and risks as soon as possible, and has subsequently actively and fully cooperated with the investigation. There has been no cover-up, interference or obstruction of the investigation, and it has actively taken remedial and corrective measures to rectify and try its best to reduce the impact on the company. influence and achieved certain results.
The party involved, Liu Wenyan, made the following written statements and defense opinions, requesting exemption or reduction of administrative penalties: First, theRegarding the illegal guarantee matters, he has not yet served as the financial director or director, and the illegal guarantees were ultra vires acts committed by Lin Yongfei. He did not participate in, did not know, and could not know the illegal guarantee matters, and he is not responsible for this behavior; secondly, for non-compliance Only some of the operating fund occupation matters occurred during his tenure, and the matter was highly concealed. His tenure was short, and it was difficult to understand the specific progress of each business and the essence of the illegal occupation of funds by the controlling shareholder. For cash mixed management The problem has also been rectified, and he is not responsible for this behavior; thirdly, the proportion of funds occupied during his tenure was relatively low, and he only played a minor role in fund occupation matters, and was not the organizer or planner of related matters. , perpetrators or direct participants, the punishment is too severe.
After review, the Guangdong Supervision Bureau of the China Securities Regulatory Commission believed that the statements and defense opinions of the parties were untenable and would not be adopted. First, although Lin Yongfei directly organized decisions and directed the implementation of Modern Avenue’s illegal guarantees, non-operating fund occupation and other matters, Modern Avenue, as the information disclosure obligor, failed to take necessary and effective control measures, resulting in inaccurate information disclosure and negligence. The Guangdong Supervision Bureau of the China Securities Regulatory Commission has fully considered Modern Avenue’s subjective state, size of fault, degree of participation, degree of cooperation with the investigation and other factors when determining the extent of the penalty, which is consistent with the principle of proportionality of punishment. Second, the Guangdong Supervision Bureau of the China Securities Regulatory Commission did not identify Liu Wenyan as the person responsible for the illegal guarantee matters. However, as the financial director and director of Modern Avenue, he was responsible for preparing the company’s financial statements and supervising the company’s financial management work. He failed to control the funds. Pay necessary attention to the actual usage after approval, contract signing and performance, etc., and sign on the financial statements to ensure that the periodic reports are true, accurate, and complete. Their opinions about ignorance and non-participation cannot be regarded as failure to perform their duties diligently. grounds for exemption. When determining the degree of punishment, the Guangdong Supervision Bureau of the China Securities Regulatory Commission has comprehensively considered factors such as the degree of involvement in the case and performance of duties, which is consistent with the principle of proportionate punishment.
In summary, based on the facts, nature, circumstances and degree of social harm of the parties’ illegal acts, and in accordance with the provisions of paragraphs 1 and 3 of Article 193 of the 2005 Securities Law, the Guangdong Supervision Bureau of the China Securities Regulatory Commission Decide:
1. Give Modern Avenue Fashion Group Co., Ltd. a warning and a fine of 400,000 yuan;
2. Give Lin Yongfei a warning and impose a fine of 600,000 yuan, including a fine of 200,000 yuan as the directly responsible person in charge and a fine of 400,000 yuan as the actual controller;
3. Warn Weng Wuqiang and Liu Wenyan and impose a fine of 150,000 yuan.
Public information shows that Modern Avenue’s main business is the research and development and design of its own brand CANUDILO high-end men’s clothing, organizing outsourced production, brand promotion and terminal sales, as well as carrying out agency business for international first-line fragrance and clothing brands.
The financial report shows that in the first three quarters of 2021, Modern Avenue achieved operating income of 280 million, a year-on-year decrease of 26.1%, and the decline was narrower than the same period last year; it achieved a net profit attributable to the parent company of 14.616 million, a year-on-year increase of 105.6%.
</p
