AutoBeta(AutoBeta.net)08/28 Report--

On August 27, the Stock Exchange of Hong Kong took disciplinary action against brilliance China Automobile Holdings Limited and three former directors. In the disciplinary action, the Hong Kong Stock Exchange publicly condemned Ma Nina, former executive director of brilliance China, Yan Bingzhe, and Sun Baowei, former executive director of brilliance China. The Hong Kong Stock Exchange said that neither Manina nor Yan Bingzhe was suitable for directorships or senior management positions at the company or any of its subsidiaries and that it would harm investors if Sun Baowei remained on the company's board of directors.

According to an investigation conducted by the Stock Exchange of Hong Kong, during the audit of the 2020 results, the auditors found that Shenyang Jinbei Automotive Industry Holdings Limited ("Jinbei Automobile Holdings"), a wholly-owned subsidiary, had provided a number of guarantees to brilliance Automobile Group Holdings Limited ("brilliance Holdings"), the then controlling shareholder. At that time, legal proceedings for enforcing the guarantee against Jinbei Automobile Control had commenced. As a result of the discovery of the guarantee, the company delayed the publication of its 2020 results and launched two independent investigations.

An independent investigation found that a number of wholly-owned subsidiaries (including Jinbei Auto Control) provided more than 53.4 billion yuan in financial assistance to brilliance and other entities for the benefit of brilliance under the influence of brilliance between 2019 and 2021. Financial assistance includes guarantees, deposit pledges and capital transactions, but does not bring any obvious commercial benefits to the company. The relevant directors held senior management positions in brilliance and, despite obvious conflicts of interest, still participated in the financial assistance provided by the company to brilliance and did not report the financial assistance to the board of directors.

Ma Nina's position in brilliance is Director of Capital Operations and Deputy Chief accountant, while her position at Jinbei Auto Control is Executive Director, and the director of Shenyang Xing far East Auto parts Co., Ltd. (hereinafter referred to as "Xing far East"), which was the sole shareholder of Jinbei Auto Control at that time. Manina, who is a major participant in all financial assistance, is aware of and participates in the arrangements for guarantee and deposit pledge, arranges the director of brilliance Capital Operations for the transaction and allows the flow of funds.

Yan Bingzhe's position in brilliance is chairman and legal representative, and executive director and chief executive of Jinbei Auto Control. Yan Bingzhe participated in part of the financial assistance and signed brilliance's board resolution that brilliance would apply for a credit line and loan extension from the bank through the joint guarantee of Jinbei Auto Control and another subsidiary of brilliance. It was aware of the guarantee and the legal procedures relating to the enforcement of the guarantee, but did not report to the board of directors.

Sun Baowei is the head of brilliance Capital Operations Department, as well as the executive director of Jinbei Automobile Control and the director of Xing far East. Sun Baowei participated in part of the financial assistance. As a director of Xing far East, he approved some of the capital transactions made to Dalian Huaxia Group, but did not report to the board of directors. Aware of the guarantee and the legal procedures relating to the enforcement of the guarantee, but did not report to the board of directors.

Brilliance Automobile Group holding Co., Ltd. was established in September 2002 with a registered capital of 800 million yuan. Brilliance Group is a large vehicle manufacturing enterprise controlled by Liaoning SASAC, which directly or indirectly controls and participates in four listed companies, and establishes brilliance BMW through its listed company brilliance China and BMW. On November 20, 2020, Shenyang Intermediate people's Court ruled that brilliance Group creditors' application for restructuring of brilliance Automobile Group was accepted, and brilliance Automobile Group officially entered the bankruptcy reorganization process. Previously, brilliance Group had three independent brands, namely, China, Golden Cup and Huasong, and two joint venture brands, brilliance BMW and brilliance Renault, but by 2024, brilliance Group had only brilliance BMW to support, and its shareholding had dropped from 50% to 25%.

According to the financial report, from 2019 to 2023, brilliance's operating income in China was 3.862 billion yuan, 3.123 billion yuan, 2.142 billion yuan, 1.131 billion yuan and 1.121 billion yuan respectively, and its net profit was 6.763 billion yuan, 11.961 billion yuan, 7.147 billion yuan and 7.735 billion yuan respectively. Prior to this, brilliance China released its interim results for 2024, with revenue of 518 million yuan during the reporting period, an increase of 2.0% over the same period last year, and net profit of 1.473 billion yuan, down 60.65% from the same period last year.

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