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Author: Chen Che

Author | Chen Che

Editor | Sun Yiming

The actual controlling couple divorced for several years but still signed a joint action agreement to jointly operate the same company. What is behind this?

Honggong Technology Co., Ltd. (hereinafter referred to as "Honggong Technology") submitted a prospectus to the GEM on June 22, 2022, and was approved at the board meeting on May 12, 2023, but has not yet submitted for registration.

The prospectus shows that the actual controllers of Honggong Technology are Luo Caihua and He Jin, who were once husband and wife and signed a divorce agreement in June 2019. Currently, the two jointly control Honggong Technology, directly holding 56.44% and 17.64% of Honggong Technology's shares respectively, and have signed a "Concerted Action Agreement."

Times Investment Research found that the two were not only major shareholders, but also held important positions in Honggong Technology, with Luo Caihua as chairman and general manager and He Jin as director and director of the general manager's office. Both of them had a significant impact on the company's operations. According to the reply to the first round of inquiry letters, before and after the divorce, except for one director, the remaining directors needed to be nominated by the two actual controllers.

What is even more surprising is that the two actual controllers have a "black history" of delaying tax payments. The prospectus shows that the 7.2086 million yuan in personal income tax that the two should have paid in 2019 has been in arrears for several years and has not been paid. However, the income of the two in 2021 can fully cover the tax.

On August 19 and August 20, Times Investment Research sent letters and made phone calls to Honggong Technology to inquire about major issues such as equity stability and failure of the actual controller to pay taxes. However, as of press time, the other party had not responded to the relevant questions.

Divorced couples still jointly control the business

Luo Caihua, who was born in Changsha, Hunan in 1983, founded Honggong Co., Ltd. (the predecessor of Honggong Technology) in 2008 after dropping out of Central South University at the age of 25. He Jin, who was also born in 1983, joined Honggong Co., Ltd. in 2008 shortly after graduating from Zhongnan University of Economics and Law, and served as a supervisor of Honggong Co., Ltd. from October 2009 to March 2014.

Judging from the timing of the above work history, the two may have started a business together and entered the palace of marriage. However, ten years after the establishment of Honggong Technology, the two ushered in the end of the marriage relationship.

According to the prospectus, the two signed a divorce agreement in June 2019. However, at present, the two are still the actual controllers of Honggong Technology.

According to the reply documents to the first round of inquiry letters, Luo Caihua and He Jin divided their property after their divorce. Both parties confirmed that since the dissolution of their marriage in 2019, the 56.44% equity of Honggong Technology directly held by Luo Caihua belongs to the man, and the 17.64% equity of Honggong Technology directly held by He Jin belongs to the woman.

From this, it can be seen that after the divorce, both parties did not distribute the equity of Honggong Technology equally.

According to the prospectus, as of the signing date of the prospectus (May 5, 2023), the two still directly hold 56.44% and 17.64% of Honggong Technology's shares respectively. In addition, the two also indirectly hold 4.04% of Honggong Technology's shares through Ganzhou Bohuai Investment Management Partnership. After the divorce, the two actual controllers still work at Honggong Technology at the same time and signed the "Agreement on Concerted Action".

Why did Luo Caihua and He Jin choose to sign a concerted action agreement after their divorce instead of going their separate ways? This is quite puzzling.

It is not uncommon for listed companies to face the risk of change of control due to the divorce of the actual controllers. On the evening of June 27 this year, Boya Precision (300971.SZ) disclosed an announcement that the divorce dispute case between the actual controllers of the company, Li Wenxi and Cen Hong, was filed by the People's Court of Xiangyang High-tech Industrial Development Zone, and Cen Hong requested a divorce order and property division. At present, the case has not yet been heard in court, and the outcome of the lawsuit cannot be determined. There is uncertainty as to whether the actual control of the company has changed.

What is even more surprising is that after divorcing due to marital discord, Luo Caihua and He Jin did not stop communicating with each other, but continued to manage the company together and held important positions in Honggong Technology. Among them, Luo Caihua served as the chairman and general manager of Honggong Technology, and He Jin was the director and director of the general manager's office.

It is worth noting that Luo Caihua has remarried Gao Xuan after the divorce. However, the prospectus did not disclose whether Luo Caihua's current wife Gao Xuan worked at Honggong Technology, but Luo Caihua, He Jin and Gao Xuan jointly provided loan guarantees for Honggong Technology.

The prospectus shows that from 2020 to 2022, Luo Caihua, Gao Xuan and He Jin jointly guaranteed three loans for Honggong Technology, all of which were joint and several liability guarantees, with amounts of 40 million yuan, 40 million yuan and 60 million yuan respectively.

The close relationship between Luo Caihua and his current and ex-wife is quite surprising, and it also makes the capital market pay more attention to how this divorced couple manages Honggong Technology.

According to the reply documents to the first round of inquiry letters, before and after the divorce of the two, in the appointment of internal directors, except for one director, the other six directors out of the seven directors were jointly nominated by Luo Caihua and He Jin.

Therefore, it remains to be seen whether Luo Caihua and He Jin can remain consistent when nominating directors in the future.

This post-divorce partnership also raised concerns from the Shenzhen Stock Exchange. In the first round of inquiries, the Shenzhen Stock Exchange asked Honggong Technology to explain whether the divorce of Luo Caihua and He Jin would result in a change in the actual controller and adversely affect the stability of the issuer's control and its ability to continue operations.

The actual controller used nearly 20 million yuan for investment and financial management but owed taxes

In addition to questions about the stability of the equity, the actual controller’s “black history” of delaying tax payments is even more eye-catching.

According to the reply document of the second round of inquiry letters, in May 2019, Honggong Technology's predecessor Honggong Limited increased its registered capital by 48.6596 million yuan. Luo Caihua and He Jin, as natural person shareholders, failed to pay a total of 7.2086 million yuan in personal income tax in time. Among them, Luo Caihua needs to pay 5.4923 million yuan and He Jin needs to pay 1.7163 million yuan.

It was not until January 6, 2023 that Honggong Technology applied to the Qiaotou Taxation Branch of the Dongguan Municipal Taxation Bureau for a deferral of individual income tax payable for the capital reserve conversion into capital. According to the prospectus, as of the signing date of the prospectus (May 5, 2023), the two actual controllers, Luo Caihua and He Jin, had not paid the tax.

In the reply document to the second round of inquiry letters, Honggong Technology explained that since there was no cash profit distribution involved after the capital reserve was converted into registered capital, the amount of personal income tax to be paid this time was large, and it was difficult for natural person shareholders to fulfill their tax obligations.

Does the actual controller really have "financial difficulties"?

According to the verification of Luo Caihua and He Jin's cash flow disclosed in the reply documents of the first round of inquiry letters, Luo Caihua earned 8.7084 million yuan in 2021, of which 2.7850 million yuan was spent on investment and financial management transferred between bank and securities accounts. He Jin's cash flow shows that He Jin's income in 2021 totaled 35.6081 million yuan, of which 18.6896 million yuan was spent on investment and financial management that year alone.

It can be seen from this that the total amount of investment and financial management expenses of the two actual controllers of Honggong Technology in 2021 has exceeded the total amount of personal income tax payable.

The actual controller has hundreds of millions or even nearly 20 million yuan for investment and financial management, but the personal income tax has been in arrears for several years and has not yet been paid. This makes people wonder whether the actual controller is deliberately evading taxes.

It is worth mentioning that according to the announcement issued by the Guangdong Securities Regulatory Bureau, Honggong Technology completed the registration for tutoring with the Guangdong Securities Regulatory Bureau on October 28, 2021, and the tutoring institution was CITIC Securities (600030.SH). During the tutoring period of the sponsor CITIC Securities, the actual controller of Honggong Technology still failed to pay the above taxes in a timely and standardized manner.

It should be noted that Honggong Technology, under the governance of two actual controllers, also has tax arrears.

In July 2024, two tax arrears notices issued by the Guangdong Provincial Electronic Taxation Bureau of the State Administration of Taxation showed that Honggong Technology owed 37,700 yuan and 144,000 yuan in taxes respectively.