China: Xia Publicly Rebuked

While the problems continue to mount up for Tony Xia in B6, he has suffered further humiliation in China after being public censured by the Shanghai Stock Exchange. Problems surrounding his company Lotus Health and a transfer of shares in a subsidiary have caused the Shanghai Stock Exchange to make public their displeasure and to inform the local government of their decision.

Shanghai

This was originally reported on Sohu.com in Chinese, available at this link.

The problems started in September 2017 when Lotus Health sold subsidiary Xiangcheng Canon Thermal Power Co to a company called Horgos Zhongxin Yuntou Venture Capital.

The deal was done for RMB244million and was to ensure Lotus Health’s income would rise for 2017.

Although the deal was approved by an EGM of the shareholders in Lotus Health, there was an inquiry made by the Shanghai Stock Exchange.

Lotus Health confirmed in an announcement to the SSE that the actual purchaser was a company Kashgar Ruikang – and that company had as controller and chairman one Tony Xia.

Lotus Health called off the deal the same day.

The SSE continued to make enquiries about the deal as it was a related party transaction, pointing out that Lotus Health had failed to disclose relevant related relationships, which denied investors the right to information and may have seriously mislead them.

The SSE found that the Chairman of Lotus Health at the time, Tony Xia, had led and concealed relevant related transaction arrangements, and publicly censured him for doing so.

They have also made the relevant reports to the China Securities Regulatory Commission and the People’s Government of Henan Province.

While this doesn’t mean much in terms of what is happening in B6, it is evidence of just how low Tony Xia’s stock in China is right now.

To be publicly censured is humiliating for a Chinese businessman as it will cause him a massive loss of face – and it will make it harder for him to attract investment to any other projects he may have.

This in turn could affect how Xia finances AVFC going forwards as it means it could be harder for Tony Xia to attract investment from China.

While reports in the local press in Birmingham indicate there are buyers interested in AVFC, the word on the street in the far east was that Xia did not want to sell to any of them.