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After the failure of re-election of the board of directors at the end of May, Huang Yehua, the actual controller of Hualing Precision (603356), "made a comeback" and once again proposed to remove the directors and supervisors of the Jiedeng Group.

On the evening of July 29, Valin Precision released an announcement that the company received a letter from the controlling shareholder Huang Yehua on July 16 requesting the convening of an extraordinary general meeting of shareholders to review the proposal to remove the directors Luo Xu, He Deyong, Ling Yunzhi and the supervisor Jin Shichun dispatched by the second largest shareholder Jiedeng Zero Carbon from their relevant positions, and at the same time to by-elect Wang Di, Chen Renjun and Li Hui as new directors, and to by-elect Rao Siping as the new supervisor.

According to the plan, Valin Precision will hold an extraordinary shareholders' meeting on August 16 to discuss the above-mentioned proposals. At that time, the Huang Yehua family and Jiedeng Zero Carbon will reveal their respective equity cards and compete for a new round of board seats.

Securities Times e-company reporter noted that over the past month, the two shareholders have been engaged in a tug-of-war for control: In mid-June, Huang Yehua's supervisor representatives Jiang Zhenhua and Wu Huanjun accused Jiden Zero Carbon's directors Luo Xu and He Deyong of violating laws and regulations in the performance of their duties, and there is no clear conclusion yet; On June 27, Jiden Zero Carbon announced that it would launch a new round of share purchase plan, intending to increase its holdings of the company's shares by 7.5% to 9%.

Who will have more initiative in this board of directors re-election will be revealed at the shareholders' meeting in August.

Nominate new directors again

The directors Luo Xu, He Deyong and Ling Yunzhi proposed to be removed by Huang Yehua were all nominated by Jiedeng Zero Carbon, the second largest shareholder of Hualing Precision. Public information shows that the actual controller of Jiedeng Zero Carbon is Ma Wei, who also controls another A-share listed company, Baoxin Technology.

Back in June 2023, Huang Yehua's family reached a control transfer agreement with Jiedeng Zero Carbon, and the latter planned to acquire Valin Precision through the transfer of shares and private placement. However, after Jiedeng Zero Carbon acquired 12.6673 million shares held by Huang Yehua's family (accounting for 9.5% of the total share capital) and entered the board of directors, the subsequent plan changed, and the change of control was terminated in May this year.

With the termination of the control change plan, Huang Yehua initiated the first round of director re-election in May this year, intending to remove the directors Luo Xu, He Deyong, Mao Jiangang, and Ling Yunzhi from the Jiedeng Group, and nominate Wang Di, Chen Renjun, Xiang Xiaohua, and Li Hui as new directors. At the same time, Huang Yehua also proposed to remove the Jiedeng Zero Carbon representative Jin Shichun from the position of supervisor, and nominate Rao Siping as the new supervisor.However, the aforementioned re-election ended in failure due to opposition from Jiden Zero Carbon and small and medium-sized investors.

Judging from the recent board votes, among the seven board members of Hualing Precision, only Huang Chao is from the Huang Yehua family (Huang Chao is Huang Yehua’s son), and Jiedeng Zero Carbon occupies the majority of seats on the board.

Two months later, Huang Yehua once again launched an attack on the board of directors. Judging from the proposal, the people Huang Yehua proposed to remove and the new nominees this time are highly overlapped with the previous time. Specifically, the number of directors proposed to be removed this time was reduced from 4 to 3, Luo Xu, He Deyong, and Ling Yunzhi are still on the list, and the supervisor proposed to be removed is still Jin Shichun.

If this re-election is successful, the number of director representatives sent by Huang Yehua's family will increase to 4, including Huang Chao, occupying the majority of seats on the board of directors, which may reverse the situation.

Who holds more equity?

The shareholders' meeting vote determines which shareholder controls more shares. After the previous shareholders' meeting failed, Huang Yehua proposed to convene a shareholders' meeting again this time. Has he made all the preparations at the equity level?

In terms of absolute shareholding ratio, Huang Yehua's family has an advantage. Specifically, Huang Yehua holds 23.6194 million shares of Valin Precision, accounting for 17.71% of the total share capital; Huang Chao holds 3.5982 million shares, accounting for 2.7% of the total share capital. The two hold a total of 27.2176 million shares, accounting for 20.41% of the total share capital. Jiedeng Zero Carbon currently only holds 12.6673 million shares of the listed company, accounting for only 9.5% of the shareholding.

However, combined with the voting results of the previous shareholders' meeting, Jiedeng Zero Carbon has received more support from small and medium-sized investors. Specifically, in the shareholders' meeting at the end of May, the votes against the four proposals to re-elect Luo Xu, He Deyong, Mao Jiangang, and Ling Yunzhi reached 48.0802 million shares, accounting for 58.63% of the number of voting shares present at the meeting, of which the number of votes against by small and medium-sized investors was 35.4129 million shares, accounting for 84.16% of the number of voting shares of small and medium-sized investors present at the meeting, becoming the key force in the rejection of the proposal.

At the shareholders' meeting to be held in August, will the small and medium-sized investors who previously voted against participate in the vote? Will they continue to support Jiedeng Zero Carbon? How many investors will Huang Yehua win approval from? It is not clear yet.

It is worth mentioning that in order to increase its shareholding ratio, Jiedeng Zero Carbon announced on June 27 that it had launched a share purchase plan, intending to increase its holdings by 10 million to 12 million shares within 90 trading days from June 28, accounting for 7.5% to 9% of the total share capital. After the increase, Jiedeng Zero Carbon's shareholding ratio will reach 17% to 18.5%.

According to the plan, the funds for Jiedeng Zero Carbon's shareholding increase will come from the registered capital paid by its controlling shareholder Jiedeng Holdings, with a total paid-in capital of no less than 150 million yuan. As of now, Valin Precision has not yet issued an announcement on the progress of Jiedeng Zero Carbon's shareholding increase.

Directors accused of violating laws and regulations in performing their duties

In addition to the competition at the equity level, in mid-June this year, Huang Yehua's supervisory representatives Jiang Zhenhua and Wu Huanjun also filed accusations against current directors Luo Xu and He Deyong, alleging that they had violated laws and regulations in the course of performing their duties, including leading transactions unrelated to the company's main business or false transactions, misappropriating funds of listed companies, and leasing and purchasing real estate unrelated to the company's operations.

Specifically, on January 19, 2024, Valin Precision and Jiangsu Jiqing New Energy Technology Co., Ltd. (hereinafter referred to as "Jiqing New Energy") signed the "Aluminum Frame Purchase Contract" with a total contract amount of RMB 31.5 million. The contract stipulates that the delivery location is No. 35 Shishan Road, Suzhou High-tech Zone (the company does not operate any business there), and paid an advance payment of RMB 9.45 million on the same day, but no delivery has been made so far; Valin Precision's wholly-owned subsidiary Liyang Anhua delivered cables worth approximately RMB 13.52 million to Jiangsu Amer and Shanghai Fengshen at the end of 2023, but has only received RMB 1 million in payment so far. At the same time, Liyang Anhua purchased RMB 13.02 million of cables from Far East Cable and has paid in full. The cables were all delivered to Huaiyuan County, Bengbu City (the company has no subsidiaries or customers there).

The aforementioned supervisor believes that the aforementioned business is not related to the company's main business and its authenticity is questionable. There is a situation where Jiedeng Zero Carbon's affiliated parties have occupied the funds of the listed company in disguised form.

It is reported that the aluminum frame transaction between Valin Precision and Jiqing New Energy is a trading business, and the downstream customer is Jiangsu Zhongji Zhengye Energy Technology Co., Ltd. The relevant order was recommended by Ma Wei, the actual controller of Jiedeng Zero Carbon; the cables sold by Liyang Anhua to Jiangsu Amer were eventually used in the Bengbu Huaiyuan Amer photovoltaic power station project, and Jiedeng Zero Carbon's affiliated company Anhui Mingshuo is the EPC contractor for the aforementioned project; the actual user of the cables sold to Shanghai Fengshen is Baoxin Solar Energy, an affiliated company of Jiedeng Zero Carbon.

In this regard, the Shanghai Stock Exchange has issued two inquiry letters to the company, asking whether the relevant business has commercial substance and whether it involves the de-affiliation of related transactions. At present, the above matters need to be further clarified.

Editor: Peng Bo

Proofreading: Gao Yuan