Analysis of Large Shareholding by a Single Employee of Chenguang Motor and Compliance Review of Historical Evolution for the Beijing Stock Exchange

Based on public information, I will provide you with a detailed analysis of the situation where a single employee of Chenguang Motor holds more than 500,000 shares, as well as the focus of the Beijing Stock Exchange review on the compliance of historical evolution.

According to the public transfer prospectus of Zhoushan Chenguang Motor Co., Ltd., the company’s equity structure has the following characteristics [1]:

• Wu Yongkuan
  (Chairman, General Manager): Directly holds 32,940,043 shares, accounting for 53.1291% of the total shares, and indirectly holds 282,000 shares through the employee stock ownership platform
• Shen Yan’er
  (Director): Directly holds 21,960,029 shares, accounting for 35.4194% of the total shares

• Zhoushan Hengchen
  (Employee Stock Ownership Platform): Holds 3,000,000 shares, accounting for 4.8387% of the total shares
• Wu Yongfu
  (Person Acting in Concert of the Actual Controller): Directly holds 2,099,928 shares, and indirectly holds shares through Zhoushan Hengchen

• Jin Jianjun (Director, Deputy General Manager): Indirectly holds 300,000 shares (through Zhoushan Hengchen)
• Liu Wei (Director): Indirectly holds 180,000 shares (through Zhoushan Hengchen)

It is worth noting that

, and he is the controlling shareholder and actual controller of the company [1][2].

According to the BSE’s issuance and listing review practices, the compliance of historical evolution is one of the core focus areas of the review [3][4]. For cases like Chenguang Motor where a single employee holds a large number of shares and there is an employee stock ownership platform, the review authority mainly focuses on the following aspects:

1. Reasons for Formation and Evolution of Nominee Shareholdings:
   The review authority will focus on inquiring about the background of nominee shareholding arrangements, the main contents of the nominee shareholding agreement, and whether laws and regulations are evaded through such arrangements [4]

2. Thoroughness of Cleanup of Nominee Shareholdings:
   • Whether the cleanup process complies with the provisions of laws and regulations
   • Whether it is the true intention of both parties
   • Whether there are disputes or potential disputes
   • Whether the relevant taxes and fees have been fully paid

3. Case of Chenguang Motor:
   According to public information, in the company’s history, Wu Yongkuan held shares as a nominee for Dong Xiancheng and his spouse Sun Ya’er. The nominee shareholding arrangement was formed in January 2004 and completely terminated on December 26, 2008. All parties involved have issued confirmation letters confirming that there are no disputes [1]

1. Employee Stock Ownership Associations and Stock Ownership Platforms:
   • Whether the establishment of the employee stock ownership platform complies with legal provisions
   • Whether the partner structure is clear
   • Whether there are any nominee shareholding arrangements

2. Zhoushan Hengchen Employee Stock Ownership Platform:
   • Established on December 25, 2022
   • The executive partner is Wu Yongkuan
   • The partners include the company’s employees, and it is used for equity incentives [2]

3. Focus on Large Shareholding by a Single Employee:
   • The identity background of the employee with large shareholding
   • Whether the source of shareholding funds is legal and compliant
   • Whether there is any tunneling or improper arrangement

1. Look-Through Calculation of Shareholder Number:
   • The Company Law imposes limits on the number of shareholders of non-public companies
   • The cumulative number of shareholders after look-through calculation shall not exceed 200 [4]

2. Compliance of the Number of Employee Shareholders:
   • The number of employees holding shares indirectly through the stock ownership platform
   • Whether there is any situation of evading the 200-person limit

1. Capital Contribution Defects:
   • Whether there were historical situations of insufficient capital contribution or false capital contribution
   • Whether non-monetary capital contribution is compliant
   • The legality and compliance of creditor’s rights as capital contribution

2. Historical Defects of Chenguang Motor:
   According to public information, the company had nominee shareholding arrangements and capital contribution defects in its history, but it has completed standardized cleanup in accordance with the law [1]

3. Compliance of Equity Transfer:
   • The pricing basis for each equity transfer
   • Whether there are differences in equity transfer terms
   • Whether the payment of taxes and fees is complete

1. Stability of Control Right:
   • Whether the identification of the controlling shareholder and actual controller is accurate
   • Whether there is any equity dispute or potential dispute
   • Whether the relationship of Persons Acting in Concert is clear

2. Control Structure of Chenguang Motor:
   • Wu Yongkuan and Shen Yan’er jointly control 96.7742% of the company’s shares
   • Wu Yongfu is a Person Acting in Concert of the Actual Controller
   • The control right is stable and there are no disputes [2]

1. Verification of the Identity of the Beneficial Owner of Nominee Shares:
   • Whether there are subjects prohibited from investing by laws and regulations
   • Whether provisions such as foreign investment restrictions are evaded [4]

2. State-Owned Enterprise Restructuring Scenario:
   • Whether the historical evolution involves state-owned assets
   • Whether the restructuring process is compliant
   • Whether the relevant approval procedures are complete

According to public information, Chenguang Motor has taken the following standardization measures in terms of the compliance of historical evolution:

• Nominee shareholding arrangements existed from January 2004 to December 2008
• The nominee shareholding arrangements were completely terminated in December 2008
• There are no disputes or potential disputes among the parties involved
• All relevant payments have been settled in full [1]

• Established Zhoushan Hengchen as the employee stock ownership platform
• The partner structure is clear
• Used for the implementation of equity incentive plans [2]

• The actual controller has issued a commitment letter
• Undertakes all legal liabilities for historical evolution defects
• Ensures that the normal production and operation of the company will not be affected [2]

Although Chenguang Motor has standardized its historical evolution, the following review points still need to be paid attention to:

1. Completeness of Cleanup of Nominee Shareholdings:
   The review authority may require a complete evidence chain of the formation, evolution and termination of nominee shareholding arrangements

2. Rationality of Large Shareholding:
   The single employee holding more than 500,000 shares needs to explain the shareholding background and source of funds

3. Compliance of the Stock Ownership Platform:
   Whether the operation of the employee stock ownership platform complies with relevant regulations

4. Sustained Standardized Operation:
   After listing, the company needs to maintain the stability of the equity structure and avoid situations such as nominee shareholding arrangements again

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[1] Public Transfer Prospectus of Zhoushan Chenguang Motor Co., Ltd. (Sinolink Securities)
[2] Prospectus of Zhoushan Chenguang Motor Co., Ltd.
[3] Hairun Tianrui Law Firm: Basic Legal Q&A on Beijing Stock Exchange Listing
[4] Hairun Tianrui Law Firm: A-Shares IPO Road Series - Key Verification Points and Solutions for Nominee Shareholdings