Ganfeng Lithium Insider Trading Case Triggers VAM Repurchase; RMB 1.6 Billion Capital Reduction Plan Underway

Based on the latest information retrieved, I will provide a detailed analysis of this case and its impact on the valuation adjustment agreement (VAM).

On December 29, 2025, Ganfeng Lithium (002460.SZ) issued an announcement stating that the company received a prosecution transfer notice from the Yichun Municipal Public Security Bureau. Due to suspicion of

, the case has been formally transferred to the procuratorate for review and prosecution[1][2][3]. This marks the formal escalation of this 2020 old case from the administrative penalty stage to criminal judicial proceedings.

The case originated in June 2020, when Jiangte Motor (formerly *ST Jiangte), which was on the verge of delisting, sought strategic investors to resolve its crisis. Promoted by local governments, Ganfeng Lithium engaged in merger and acquisition negotiations with it. During the insider information sensitive period (June 9 to August 13, 2020), Ganfeng Lithium purchased a total of 15.6777 million shares of Jiangte Motor through its corporate securities account, costing RMB 26.4838 million. It sold all shares one week later for RMB 27.6329 million,

[1][2].

In July 2024, the Jiangxi Securities Regulatory Bureau imposed an administrative penalty on Ganfeng Lithium: confiscating the illegal gains of RMB 1.1053 million and imposing a fine of RMB 3.3159 million; fining Chairman Li Liangbin and then Secretary of the Board Ouyang Ming RMB 600,000 and RMB 200,000 respectively[1][2]. This transfer to the procuratorate for review and prosecution means that the responsible persons may face harsher criminal penalties. According to the Criminal Law, those guilty of serious insider trading offenses may be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and those with especially serious circumstances may be sentenced to fixed-term imprisonment of not less than five years but not more than ten years[2].

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Based on the detailed information obtained, Ganfeng Lithium Power set clear IPO VAM clauses during its capital increases and share expansions in July 2021 and November 2022, stipulating that

[2][3]. The triggering conditions include two aspects:

First,

. According to the China Securities Regulatory Commission (CSRC) “Rules on Spin-off Listing of Listed Companies (Trial)”, if a listed company or its controlling shareholder or actual controller has been subject to an administrative penalty by the CSRC within the most recent 36 months, it may not spin off its subsidiary for listing. Ganfeng Lithium’s administrative penalty in July 2024 directly violated this regulatory red line[1][2][3].

Second,

. The IPO VAM term officially expired on December 31, 2025, and Ganfeng Lithium Power’s three-year-prepared spin-off listing plan was officially derailed, thus triggering the repurchase clauses in the capital increase agreement[1][3].

It should be noted that

, because the core clauses of the VAM mainly focus on whether the IPO can be completed on schedule. However, criminal penalties may bring the following indirect impacts:

First,

. If finally convicted, it may cause the listed company or its controlling shareholder or actual controller to fail to meet the requirements of the “Rules on Spin-off Listing of Listed Companies” for a longer period of time, thereby affecting Ganfeng Lithium Power’s subsequent capital operation plans[2].

Second,

. The escalation of the criminal case may further shake strategic investors’ confidence in Ganfeng Lithium Power’s future development prospects, affecting the company’s subsequent financing capabilities[1].

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In response to the triggered VAM clauses, Ganfeng Lithium

, with the specific arrangements as follows[1][3]:

Item	Details
Repurchasing Entity	Ganfeng Lithium (Parent Company)
Repurchase Amount	RMB 1.6 Billion
Repurchase Scale	No more than 499 million shares
Covered Shareholders	28 Shareholders
Return Benchmark	6% annualized (higher than the yield of market wealth management products in the same period)

Despite the relatively favorable repurchase terms offered by Ganfeng Lithium,

, including[1][2][3]:

• Hainan Jimu Venture Capital Co., Ltd.
• Hubei Xiaomi Yangtze River Industrial Fund Partnership (Limited Partnership)
• Anker Innovations (300866.SZ)
• Well-known investors such as Dongfeng Motor and Jimu Venture Capital

Notably, Ganfeng Lithium does not seem to have completely abandoned its spin-off listing plan.

, with a total capital increase of no more than RMB 2.5 billion. According to the new version of the Shareholders’ Agreement, a new exit mechanism has been set up: if Ganfeng Lithium Power fails to , investors may exit through targeted capital reduction[2][3].

This means that although the previous VAM clauses have been triggered and implemented, the new VAM has again set a clear listing schedule for the company. If it fails to meet the deadline, it will

[2].

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, because the VAM mainly determines whether to trigger repurchase based on whether the IPO is completed. The real triggering factors are:

1. The administrative penalty in July 2024 led to a violation of the “Rules on Spin-off Listing of Listed Companies”
2. The IPO VAM term naturally expired on December 31, 2025

Currently,

, and 23 strategic investors have exited through share repurchase.

If the final judgment of the criminal case is unfavorable to Ganfeng Lithium, the following chain reactions may occur:

Aspect	Impact Analysis
Capital Operations	Extend the time required for Ganfeng Lithium Power to meet the “Rules on Spin-off Listing of Listed Companies”, increasing the difficulty of subsequent capital operations
Repurchase Risk	The new VAM clauses added in September 2025 may face triggering risk again after 36 months
Market Confidence	May further affect strategic investors’ confidence and increase the company’s subsequent financing costs
Stock Price Performance	The market value has evaporated by over RMB 200 billion from its peak, and the criminal case may continue to pressure the stock price

Overall, this insider trading case with a profit of only RMB 1.1053 million has brought far more heavy costs to Ganfeng Lithium than expected. Not only does it face the risk of criminal liability, but its carefully planned subsidiary spin-off listing plan has also basically been derailed. Investors should pay close attention to the subsequent progress of the case and changes in relevant regulatory policies.

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[1] Caizhongshe - “Ganfeng Lithium Makes RMB 1.1 Million from Insider Trading: Derails Subsidiary’s IPO, Spends RMB 1.6 Billion” (https://m.caizhongshe.cn/news-7540727959021214253.html)

[2] Futu News - “Ganfeng Lithium’s Insider Trading Case Ferments Again; Administrative Penalty Upgrades to ‘Handcuff Risk’” (https://news.futunn.com/post/66892252)

[3] CNFOl - “From ‘Lithium King’ to ‘Involved Party’: Ganfeng Lithium’s Insider Trading Dilemma” (http://mp.cnfol.com/26056/article/1767620709-142198497.html)