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On the evening of July 24, Spacetime Technology (605178.SH) issued an announcement stating that Mr. Yang Yaohua and Ms. Zhou Lei, shareholders holding more than 5% of the company's shares, have completed the procedures for dissolving their marriage through an agreement. Yang Yaohua will divide his approximately 4.7641 million shares (accounting for 4.8% of the total share capital of the listed company) into Zhou Lei's name, with a share value of more than 50 million yuan.

It is worth noting that in the first half of this year, many listed companies such as Shanghai Hugong, Shuangyi Technology, Minglida, and Reliable Shares have issued announcements of divorce of major shareholders. Among them, the market value of shares involved in the divorce of the actual controller of Shanghai Hugong is as high as hundreds of millions of yuan. According to incomplete statistics, a total of 29 chairmen of listed companies in the A-share market chose to divorce in 2023.

Regarding the high-priced divorce cases of listed companies, some people joked that "A-shares don't believe in love", while others questioned whether the actual controllers of listed companies reduced their holdings in disguise through "technical divorces". For this reason, the China Securities Regulatory Commission also stated that the "key minority" such as major shareholders of listed companies shall not circumvent the reduction restrictions by divorce or other means.

Spacetime Technology shareholders sold 13 million shares before "divorce"

Since the beginning of this year, there have been many divorce cases in the A-share market.

The most recent incident was with Spacetime Technology, which released an announcement stating that Mr. Yang Yaohua and Ms. Zhou Lei, shareholders holding more than 5% of the company's shares, had gone through the procedures for dissolving their marriage through an agreement and had made arrangements for the division of shares.

According to the divorce agreement, Yang Yaohua divided his approximately 4.7641 million shares (accounting for 4.8% of the total share capital of the listed company) into Zhou Lei's name. Based on the latest closing price, the market value of the stocks involved in this change exceeded 50 million yuan.

It is understood that before this equity change, Yang Yaohua held 11,913,260 shares of the company, accounting for 12% of the company's total share capital, and Zhou Lei did not hold any shares of the company before this equity change. After the equity change, Yang Yaohua held 7,149,183 shares of the company, accounting for about 7.2% of the company's total share capital; Zhou Lei held 4,764,077 shares of the company, accounting for about 4.8% of the company's total share capital.

It is worth noting that before the "divorce" equity division, Yang Yaohua, a shareholder holding more than 5% of Space-Time Technology, had reduced his holdings in the company. According to the company's announcement in June, Yang Yaohua reduced his holdings in the company by 992,500 shares through centralized bidding transactions, accounting for 1% of the company's total share capital, and the total amount of reduction reached 13.019 million yuan.

Previously, Spacetime Technology released a notice of loss forecast for the semi-annual performance in 2024. During the reporting period, the company realized a net loss of 67 million to 82 million yuan attributable to the parent company, which was still not a loss compared with the same period last year. Moreover, the company has been losing money for three consecutive years.

There are many divorce cases in A-share market this year

In fact, cases of equity division due to divorce are not uncommon this year.

On the evening of July 12, Shanghai Hugong (603131.SH) issued an announcement that the company's controlling shareholder Shu Hongrui and shareholder Miao Liping have reached a divorce litigation mediation. Shu Hongrui should transfer his approximately 39.7075 million shares of the company to Miao Liping before July 30, 2024. According to calculations, the divorce "breakup" fee of the actual controller of Shanghai Hugong is not cheap, and the stock market value is as high as hundreds of millions of yuan.

In June, Shuangyi Technology (300690.SZ) announced that the actual controller of the company, Ms. Guo Hongmei, and Mr. Wang Qinghai, had completed the divorce registration procedures. According to the divorce agreement, Guo Hongmei transferred the approximately 862,600 shares of the company (accounting for 0.52% of the company's total share capital) of unrestricted tradable A shares directly held by her to Wang Qinghai. After the share split, Guo Hongmei held approximately 915,500 shares of the company's stock (accounting for approximately 0.55% of the company's total share capital), and Wang Qinghai held 862,600 shares of the company's stock (accounting for approximately 0.52% of the company's total share capital).

Minglida (301268.SZ) announced in February that the actual controller of the company, Mr. Tao Cheng, and Ms. Lu Pingfang negotiated that Tao Cheng intended to split and transfer the 10,874,880 shares of the company he directly held to Lu Pingfang. The announcement showed that the change in equity was due to the dissolution of the company's actual controller's marriage and the division of property.

In addition, Reliable Shares (301009.SZ) announced that the actual controller of the company, Mr. Jin Liwei, and Ms. Bao Jia, have completed the dissolution of their marriage through friendly negotiation. Jin Liwei will transfer approximately 79.1907 million shares registered in his name (accounting for approximately 29.13% of the total share capital) to Bao Jia in a split manner.

It can be seen that the actual controllers of the above-mentioned companies have divorced this year, and these shareholders have made corresponding "arrangements" on the share division matters.

According to incomplete statistics, last year, the chairmen of 29 listed companies chose to "part ways" with their spouses, including well-known listed companies such as 360 (601360.SH), Jierong Technology (002855.SZ), and Giant Network (002558.SZ). The following figure is a summary of the divorce of chairmen of listed companies in 2023:

Thresholds should be set for "technical divorce"

"Divorce cases" frequently occur among A-share listed companies, and the market discussion on "technical divorce" is once again in the spotlight.

Generally speaking, "technical divorce" refers to a divorce in which both spouses agree not on a breakdown in their relationship, but rather use divorce to circumvent housing purchase restrictions, business bans, share reduction regulations, and evade debts.

Legal experts said that it is very difficult to identify "technical divorce" from a legal perspective. Because divorce involves personal privacy and other issues, there are currently no relevant regulations for mandatory disclosure of divorces of major shareholders, directors, supervisors and senior managers. Even if they are disclosed, the outside world cannot judge the authenticity. Information disclosure is only required in accordance with the law when major shareholders, directors, supervisors and senior managers split shares through non-transaction transfers when they divorce, or when there are major changes in shares that affect the identification of the company's actual controllers.

In response to many chaos, the China Securities Regulatory Commission has previously responded that major shareholders of listed companies (i.e. controlling shareholders, shareholders holding more than 5% of the shares), directors, supervisors and senior managers, as the "key minority", have special obligations and responsibilities in the company's business development and governance operations, and may not circumvent restrictions on share reduction by any means such as divorce, dissolution liquidation, or separation.

Industry insiders suggest that from a regulatory perspective, conditions should be set for "technical divorces." For example, it is required that major shareholders, directors, supervisors and senior managers of listed companies should not reduce their holdings of company shares within a certain period of time after divorce, or the number of shares reduced should not exceed a certain proportion. In addition, it is necessary to strengthen the review of the reduction of shares through divorce, as well as the punishment of related illegal and irregular behaviors, and further improve the supervision channels of the public and investors.