Yanzhong Industrial is a typical three-no concept stock in the secondary market - no state-owned shares, unincorporated shares, and no foreign-invested shares. All its company shares are tradable shares. The ownership structure is very dispersed and it has no special characteristics. Major shareholders with advantages are the most likely targets in acquisitions. In September 1993, Baoan Group acquired Yanzhong Industrial in the secondary market, kicking off the acquisition of listed companies in China.

On February 5, 1998, Peking University Founder and related companies acquired Yanzhong Industrial in the secondary market, and then injected high-quality assets such as computers and color monitors into Yanzhong Industrial and changed its name to Founder Technology , becoming the first company to achieve a backdoor listing entirely through secondary market acquisitions. The same mergers and acquisitions also include Tianjin Dagang Oilfield’s acquisition of Aishi shares.

: How to go public via backdoor listing?

(1) Early preparation

1. The acquirer hires a financial advisory agency.

2. Assist the company in selecting other intermediaries, generally including accounting firms, asset appraisal agencies, law firms, etc.

3. Conduct preliminary due diligence on the company’s business and assets, assist the company in drafting an asset integration plan, and determine the scope of assets to be listed.

4. The financial consultant searches for a suitable shell company based on the needs of the acquirer and initially evaluates the value of the shell company.

5. Formulate negotiation strategies, arrange negotiations with relevant shareholders of the shell company, and formulate reorganization plans and work schedules.

(2) Preparation of application materials

1. Major asset restructuring report and related documents.

2. Documents issued by independent financial advisors and law firms.

3. Documents related to financial information involved in this major asset reorganization.

4. Relevant agreements, contracts and resolutions involved in this major asset reorganization.

5. Other documents for this major asset reorganization.

(3) Securities Regulatory Commission review

1. Shell companies apply for trading suspension in accordance with regulations and regularly disclose progress to the public.

2. The transaction structure, price, etc. must be approved and authorized by the authority of the shell company.

3. Declare relevant documents as required by the China Securities Regulatory Commission.

4. Provide timely explanations to the feedback provided by the China Securities Regulatory Commission.

5. The members of the Reorganization Committee will vote to decide on the administrative license for the project.

(4) Implementation of backdoor plan and continuous supervision

1. After approval by the China Securities Regulatory Commission, the assets transferred out and placed in will be delivered and transferred.

2. Restructure the assets involved.

3. Placement of enterprise personnel after reorganization.

4. Inheritance of the shell company’s claims and debts.

5. Reorganize the board of directors and other authority bodies to strengthen control over listed companies.

6. Depending on the restructuring situation, independent financial consultants will continue to supervise the listed company for one to three fiscal years or more.

7. Cultivate other high-quality businesses and assets under the company, gradually inject assets into listed companies, expand market value, and promote asset securitization.

8. Refinancing through allotment of shares, non-public issuance, etc., to supplement the liquidity of listed companies, subject to meeting laws, regulations and conditions stipulated by the China Securities Regulatory Commission.