"Qiong Minyuan", the full name of Hainan Modern Agriculture Development Co., Ltd., was once one of the most dazzling "big dark horses" in the Chinese stock market in 1996, with the stock price rising as high as 1,059 throughout the year. He was investigated for being accused of producing false financial accounting reports, and the company's stock was suspended from trading on March 1, 1997. After more than a year of long and painful waiting and anticipation, on April 29, 1998, the China Securities Regulatory Commission announced its investigation results and handling opinions on the "Qiong Minyuan" case. The investigation found that of the 571 million yuan in profits claimed in the 1996 annual report of "Qiong Minyuan", 566 million yuan was fictitious, and the capital reserve fund had been falsely increased by 657 million yuan. In view of the suspected criminal behavior of Ma Yuhe, the former chairman and general manager of Qiong Minyuan, and others in creating false financial data, the China Securities Regulatory Commission immediately handed over the relevant materials to the judicial authorities.
On June 10, 1998, the case officially opened in the Beijing No. 1 Intermediate People's Court. The person on trial was Ma Yuhe, chairman of "Qiong Minyuan". From the beginning of 1996 to the end of February 1997, "Qiong Minyuan" gradually appeared from the "biggest dark horse" in the stock market to the "biggest scam". On November 12, the Beijing Intermediate Court made a verdict: Ma Yuhe, chairman of "Qiong Minyuan", was sentenced to three years in prison. At this point, the biggest stock market myth in the history of the Chinese stock market has come to an end.
"Qiong Minyuan" seriously misled investors in 1996 due to a false annual report, causing the stock price to skyrocket in a short period of time. A large number of investors were locked in at a high price, constituting the most serious securities fraud case in the history of Chinese securities. The company's restructuring therefore became a difficult experiment in China's securities market.
The "Qiong Minyuan" incident has made more than 100,000 "Qiong Minyuan" shareholders helpless spectators of scenes in the stock market. Almost all of them have experienced expectations, hopes, disappointments, A hopeless process of spiritual refinement. How did Ma Yuhe, as the founder, become the creator of tens of thousands of people’s nightmares? How did it all start?
Rising from the ground, the “stock market myth”
In early 1996, Shenzhen The market was still lingering in the shadow of the unfinished bearish journey. The Component Index was once hit below 1,000 points, and then began a comprehensive reversal. With a three-fold increase, it ranked first among the world's stock markets that year. As the return of Hong Kong approaches, the Shenzhen stock market has received much attention from investors. Moreover, the macroeconomy is getting better, inflation is falling month by month, and the introduction of financial benefits is a foregone conclusion...
As the stock market gets better, the index slowly rises, and a large number of ordinary people begin to pour into the stock market. The Shenzhen stock market lost no time in setting up the banner of Shenzhen Development, and led the market to continuously cross the transaction-intensive area in history. At the same time, a group of stocks that have been regarded as "junk" for many years have also begun to embark on the path of "value return". A few dozen percent a day, but there are many stocks that double in a few days. People need to make big money, and the market needs big dark horses.
While people are pursuing high performance and looking for dark horses, a stock that has been buried among many junk stocks for a long time has been carefully played by some invisible but powerful hands. Suddenly there was a light. This is "Qiong Minyuan" who is called by market participants as "creating the myth of China's stock market in 1996".
The reason why it is called a "myth" lies entirely in a simple and intuitive price comparison relationship. When the Shenzhen Stock Exchange Index was at its lowest before April 1996, the share price of "Qiong Minyuan" was only around 2 yuan. After the market improved and entered a bull market, "Qiong Minyuan" "returned in value" along with the broader market. By June, the stock price had more than doubled. Due to the bear market for several years, there are many such "undervalued" stocks in the market, and it is not unusual for them to double or triple. However, after a month of consolidation, starting from July 1, "Qiong Minyuan" started at 4.45 yuan. In the past four months of unilateral rise, its stock price has pointed to 20 yuan, which has increased several times. At this time, "Qiong Minyuan" seemed to have jumped from a junk stock that no one patronized to a highly sought-after blue chip stock. It even replaced Shenzhen Development Bank's leading position and became the forerunner to start the strengthening of the Shenzhen market and the "low-price stock revolution" . At this point, an eye-catching "stock market myth" was created.
Market speculation, "value discovery"
In the first half of 1996, under the demonstration effect of Shenzhen Development Bank's "value return", almost every stock rose from the bottom without exception. come out. After a period of time, the market speculation seemed to have entered a vacuum for a while, and the market was eager to find a new "leader" that could also stimulate popularity. Almost at the same time, under the instigation of the main players, the market again raised the banner of "value discovery". Any available subject matter may be cast in a seductive halo.
While the main force is deliberately weaving various concepts, it is also sparing no effort to find "dark horses" with acceptable qualifications. After "Qiong Minyuan" was excavated, it had the most aura and was the most glorious. Such as "loss-turning concept stocks", "capital concept stocks", "agricultural concept stocks", "real estate concept stocks", "high-tech concept stocks", "policy tilt concept stocks", "high-speed growth concept stocks", and even puzzling "relationship concept stocks" and so on. It can be said that any concept shows the unique "advantages" of "Qiong Minyuan" and the "high returns" it may bring.
"Qiong Minyuan" has added an even more eye-catching move in a series of amazing moves. On January 22, 1997, the company took the lead in announcing its 1996 annual report. This annual report, which was dubbed "Brilliant Debut", clearly listed: Earnings per share were 0.867 yuan, net profit increased 1290.68 times year-on-year; the distribution plan was to transfer 9.8 shares for every 10 shares. As soon as the annual report came out, the market was shocked, and the stock price immediately hit a new high of 26.18 yuan. Some cheered, some stamped their feet, and those who were so ignorant even squeezed their palms into sweat. Some sober-minded people expressed confusion: Where does the profit of "Qiong Minyuan" come from with such impressive performance?
Three major violations
In the investigation results of the "Qiong Minyuan" case announced by the China Securities Regulatory Commission, three major violations were raised: false declaration of profits, false increase of capital reserve fund , manipulate the market.
——About false declaration of profits. The prosecutor determined that "Qiong Minyuan" fabricated 566 million yuan in false claims by signing invalid contracts with affiliated companies and others for cooperative housing construction and equity transfer that were not approved by relevant state departments without obtaining land use rights. Income, these false incomes all come from Beijing Minyuan Building. Minyuan Building is a real estate project jointly developed by "Qiong Minyuan" and four parties including Beijing Pharmaceutical Factory, Hong Kong Guanlian Real Estate Company, Jingong Real Estate Company, and Beijing Fuqun New Technology Development Company. Among them, Beijing Pharmaceutical Factory provides the land, Hong Kong Guanlian Real Estate Company is one of the parties to the investment cooperation, and the other partner, Fuqun Company, is the second largest shareholder of "Qiong Minyuan". The Minyuan Building project has been suspended. It was this unfinished project that at the end of 1996 brought "Qiong Minyuan" three suspicious incomes totaling 566 million yuan.
——About the false increase in capital reserve fund. The 1996 annual report of "Qiong Minyuan" claimed that its capital reserve increased by 657 million yuan, mainly from the reassessment of some land. The prosecutor believes that the so-called capital reserve fund of 657 million yuan is an asset assessment of four investment projects fabricated by "Qiong Minyuan" without obtaining land use rights, project approval and confirmation by relevant national departments, and violates relevant laws and regulations. , constitutes serious misrepresentation.
——About market manipulation. According to an investigation by the China Securities Regulatory Commission, Minyuan Hainan Company, the controlling shareholder of "Qiong Minyuan", teamed up with Shenzhen Nonferrous Metals Finance Company to buy a large amount of "Qiong Minyuan" before it announced the "good news" in its 1996 interim report. Source" stocks were sold in large quantities before March 1997 and made huge profits.
Reorganization process
Data show that after "Qiong Minyuan" adjusted its accounts, its total assets increased from nearly 2.6 billion yuan to about 1 billion yuan, and its net assets increased from the original 2.6 billion yuan to about 1 billion yuan. More than 2 billion yuan turned into nearly 800 million yuan. This shows that the possibility of "asset restructuring" of "Qiong Minyuan" in any way has been zero.
After the trial of the case, "Qiong Minyuan" began to enter the reorganization stage:
The first is the equity transfer.
On November 20, 1998, the Beijing Municipal Government approved the transfer of 38.92% of the state-owned legal person shares of "Qiong Minyuan" held by Minyuan Hainan Company to Beijing Housing Development and Construction Group Corporation (hereinafter referred to as "Beijing Housing Corporation").
The second is to convene the first extraordinary general meeting of shareholders. On January 5, 1999, the extraordinary general meeting of shareholders of "Qiong Minyuan" was held in Shenzhen. A new board of directors and supervisory board were elected, and Beijing Jingdu Accounting Firm and Dewei Asset Appraisal Company were hired to conduct an assessment of the financial status of the assets of "Qiong Minyuan". Verify and authorize the new board of directors to reorganize the company.
The third is to convene the second extraordinary shareholders' meeting to establish the company's reorganization plan of "initiation and establishment, private placement, equal share exchange, and new issuance".
Fourthly, "Qiong Minyuan" was terminated from listing, and Beijing Housing General and other legal person shareholders *** jointly launched a "second venture" in "Qiong Minyuan". After the company's restructuring and share exchange is completed, the board of directors of "Qiong Minyuan" will apply to the China Securities Regulatory Commission for the termination of listing of "Qiong Minyuan". After the listing of "Qiong Minyuan" was terminated, it carried out "secondary entrepreneurship" with the support of the Beijing Municipal Government and other government authorities.
Evaluation of the overall reorganization plan
"Initiation, private placement, equal share exchange, and new issuance" are innovations in China's securities market and demonstrate a brand-new restructuring model. This reorganization retains the continuity of the legal entity of the reorganized company, and the creditor's rights and debt relationships of the original company remain unchanged. It avoids the debt transfer and refinancing problems encountered in the currently commonly used asset replacement method, and provides a good foundation for the reorganized company. Feasible development ideas and specific measures have been put forward for enterprises with non-performing assets to continue to play their role and effectively improve their operations. The share exchange plan takes into account the interests of all parties and solves the difficulties faced by the restructuring.
First, the public shareholders of "Qiong Minyuan" receive compensation. Through the "equal exchange of shares", public shareholders were exchanged from "Qiong Minyuan" with an estimated net asset value of only 0.032 yuan per share to shares of the newly established company with an estimated net asset value of 2.21 yuan per share in 1998. Taking into account Zhongguancun pricing in the secondary market, public shares have received better compensation.
Second, Beijing Housing and Urban-Rural Development will gain the following benefits. First, through this reorganization, we will achieve listing, invest in high-quality assets, open up financing channels, control the listed company Zhongguancun, and achieve the group's strategic goal of further development through capital operations. The second is to significantly enhance corporate visibility. The third is to share the government's worries and contribute to social stability. As the subject of this company reorganization, Beijing Housing and Urban-Rural Development Group bears huge risks. The design of the restructuring plan has always given top priority to protecting and compensating the interests of public shareholders and maintaining social stability. This has created a good social image for Beijing Housing and Urban-Rural Development and Zhongguancun.
Thirdly, for the development of Zhongguancun, it not only builds the high-tech leading concept of "Zhongguancun Silicon Valley" in China's capital market, but also jointly sponsors the establishment of the company by seven well-known enterprises, which provides a good corporate governance structure. The construction and the introduction of high-tech projects laid a double foreshadowing.
However, this restructuring also exposed some deep-seated problems in China’s securities market. How are losses caused by corporate false listings and false information fraud shared among market participants such as listed companies, regulators, intermediaries, and investors? How to scientifically define the responsibilities and rights of all parties? etc. Although "Qiong Minyuan" retained its status as a legal subject, through share exchange, "Qiong Minyuan" shareholders became Zhongguancun shareholders and received investment compensation. Survival of the fittest is the result and form of resource allocation in the securities market. Failure to truly delist and allowing investors to bear investment risks will undoubtedly seriously affect the efficiency of resource allocation in the securities market.
The "Qiong Minyuan" case has finally come to an end, but its impact on my country's securities market is far from over. How to view, think about and learn the lessons of "Qiong Minyuan" is a must for regulating my country's securities market. issues faced.