Jul. 14, 2017
By Think Real - On 1 June, 2017, the China Securities Regulatory Commission (CSRC) officially announced that Jingbo Agrochemicals Technology Co., Ltd. (Jingbo Agrochemicals)’s initial public offerings (IPO) was rejected, which was a result of the doubt about the company’s several problems such as the interest of minority shareholders and the realness of the clients.
Here are 3 key doubts raised by the CSRC:
1. Jingbo Agrochemicals runs its business based on the assets from Shandong Chambroad Holding Co., Ltd. (Shandong Chambroad), which historically has had 200+ persons entrusted to hold shares. Hence, Jingbo Agrochemicals is required to make it clear that:
1) whether its structure of equity was greatly different from Shandong Chambroad’s when it acquired the latter’s operational assets and businesses;
2) whether Shandong Chambroad agreed to transfer the assets above to the minority shareholders;
3) how it would guarantee Shandong Chambroad’s interest;
4) whether there are potential disputes;
5) whether it has plans to entrust persons to hold shares.
2. Since 1 January, 2013, the banks have offered loans to Jingbo Agrochemicals’ 2 affiliated companies based on contracts, and the 2 companies have transferred the sum to Jingbo Agrochemicals promptly. Hence the CSRC raised, “Jingbo Agrochemicals should specify the necessity of the loaning and the subsequent implementation, and should make it clear about the legality.”
3. Jingbo Agrochemicals develops distributors nationwide, and most of the distributors are persons engaged in individually owned business. In 2014, the number of distributors declined around 1,000, and the check about their realness decreased greatly. Hence, Jingbo Agrochemicals should explain the reasons and should specify that whether the check is enough, and in addition, should demonstrate the check conducted by the entrusted issuing organization, Guangdong Shengshi Guofeng Agricultural Development Co., Ltd. on 694 small-scale distributors.
Jingbo Agrochemicals is an agrochemical company engaged in the production of pesticide technical and formulations. Regarding this IPO, the company intended to issue no more than 40.1 million shares at the Shenzhen Stock Exchange (second-board market specifically) for about USD66.6 million. This funding is aimed at a 10,000 t/a environmentally friendly pesticide formulations project, a technology center project, a pesticide formulations marketing & technical service network construction project and working capital.