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Source: Cover News

Cover News reporter Meng Mei

On July 25, 2024, Oriental Selection announced on the Hong Kong Stock Exchange that Dong Yuhui decided to no longer serve as an employee of the company and a senior management of a merged affiliated entity of the company. The resignation took effect on July 25 due to Dong Yuhui's career ambitions, commitment to other careers and personal time arrangements.

In addition to paying the promised benefits and compensation to Dong Yuhui, Chairman of the Board Yu Minhong has sought approval from the Board and the Board's Remuneration Committee to distribute all remaining undistributed profits of Huixingxing to Dong Yuhui.

At the same time, Yu Minhong also made arrangements for the settlement price of Dong Yuhui's acquisition of Yuhui Tongxing in accordance with the listing rules and the company's organizational articles of association. In addition, in order to maintain the normal operation of Yuhui Tongxing, Dongfang Zhenxuan will provide Yuhui Tongxing with its self-developed information system free of charge.

This change between Dongfang Zhenxuan and Dong Yuhui has attracted widespread attention. On July 25, Dongfang Zhenxuan also disclosed that it would sell 100% of the equity of Yuhui Tongxing to Dong Yuhui for 76.5855 million yuan. Dong Yuhui will pay the transaction price in two installments, and the parties to the agreement will make every effort to complete it within 6 months. Dong Yuhui said that Yuhui Tongxing will be able to maintain the company's operations and expenditure costs such as rent and employee wages for a period of time in the future.

After the news was released, the stock price fell sharply in the morning trading today, and the intraday decline was close to 30%. As of press time, it fell 20.89% to HK$9.81.

This article will not elaborate on the disputes and grievances between Dong Yuhui and Dongfang Selection and Yu Minhong. "There are a thousand Hamlets in the eyes of a thousand people", each with their own difficulties and desires.

What I want to talk about today is whether Yu Minhong’s statement, “I arranged the money for Yuhui to purchase the company, and the company is a gift to Yuhui” is in line with the modern enterprise management system and the management system of listed companies.

The core assets of a listed company were divested 100% at 76 million yuan, far below the market fair value. It was easily said.

Core employees leaving, important subsidiaries transferring, salary rewards, financial support, each of which only requires the authorization of the board of directors, and each of which complies with the relevant regulations of listed companies, but in the end, the small shareholders are the ones who pay the bill and suffer the most, and the core interests of listed companies are damaged. There are many MCN companies that are overly dependent on super anchors, and Dongfang Zhenxuan is the first one to offer 100% naked refunds and travel expenses. This can be seen from the performance of the stock price after the news was announced.

As we all know, Oriental Selection is a listed company. Although Yu Minhong is the actual controller, he does not hold all the shares. Small and medium shareholders account for more than 42%. Yu Minhong can be a good person, but the damaged small shareholders (shareholders of Oriental Selection and New Oriental) are helpless.

Coincidentally, the generosity of Yu Minhong can be compared with that of Wahaha's Zong Fuli, who first announced her resignation and then announced her return. This has damaged the stability of the entire Wahaha management team: Zong Fuli played an important role in Wahaha's marketing strategy and brand building. Her departure may lead to turmoil in the company's management team. Since she frequently replaced middle and senior management after taking over, internal conflicts and instability have already occurred.

As the daughter of Zong Qinghou, Zong Fuli was once regarded as the heir of Wahaha Group. Her resignation may damage Wahaha's brand image, especially forming a negative impression in the minds of consumers. In addition, the emotional expression in her resignation letter may also trigger further public doubts about her management ability and integrity, and also cause market concerns about the stability of its management and future development.

These two events may seem unrelated, but their impact and inspiration on the market are profound. Whether it is Dongfang Zhenxuan or Wahaha, the long-term development of an enterprise should rely more on the team rather than a single leader, and listed companies should not become a tool for the actual controller to show his personal interests.

At the same time, private enterprises still have a long way to go in improving and protecting the interests of small and medium-sized investors. From the Dongfang Selection incident, we can see that the difficulties faced by small and medium-sized shareholders in exercising their rights are in sharp contrast to the long-term strength of major shareholders. In the long run, it is very easy to cause a series of problems such as loose corporate governance, controlling shareholders "hollowing out" listed companies, and infringement of the interests of small and medium-sized investors. The separation of Dongfang Selection and Yuhui Tongxing has come to an end, but the impact on small and medium-sized shareholders is far-reaching.