Beijing time at 10:00 am on June 15th.
Liu Mingyu debugged the Video Conference system in Meeting Room of Henglong Group Headquarters, and a dozen small windows were divided on the screen--
Shen Jue, Song Zhongping, Xu Yong, Sun Zhengping, Wu Hongyuan, Chen Qiming, Chen Wei, and Zhao Chen as far away as United States.
Zhang Qingxue and Chen Xi were sitting in the front row of Shan City Meeting Room, with the first draft of the pledge announcement and the draft terms of the compensation plan spread out in front of them.
Liu Mingyu announced the start of the meeting, with only two topics:
Controlling Shareholder understands the use of funds after pledging shares, and the compensation plan for breach of promise.
Shen Jue, the second Major Shareholder, spoke first, with no questioning in his tone, only a cautiousness that had settled after being kept in the dark for too long.
"Zhao Zong, Henglong's stocks have been pledged by you. The market will know about this sooner or later.
But before the announcement is sent out, Board of Directors needs to hear a complete explanation from you personally--
Where did the raised funds go? Will it affect Henglong's Control?"
Zhao Chen leaned back in his chair, and the light from the screen hit the side of his face. It was two o'clock in the morning New York and it was pitch black outside the window.
He was silent for a few seconds and then spoke.
The voice was not high, but every speaker in Meeting Room sent every word he spoke to the ears of everyone present.
"I'm still going to Wall Street.
I used the funds raised from the pledge financing of Henglong to increase my holdings of the stocks of two companies in Secondary Market.
One is named Tesla, and the other is named Nvidia."
He paused, "I am the actual controller of Era Vanguard.
Era Vanguard is currently the second Major Shareholder of Tesla, the largest institutional shareholder of Nvidia, and SpaceX is an external shareholder holding more than 5% of the shares."
Shan City Meeting Room The air seemed to have been sucked out of all sound.
Song Zhongping's fingers stopped on the conference table. Chen Qiming turned over Henglong Financial Report's hand hung in the air.
Independent Director Xu Yong, who was sitting at the very edge, took off his glasses and wiped them. After putting them on again, his eyes were fixed on the small window of Zhao Chen on the screen, motionless.
Era Vanguard--No one here has never heard of this name.
From November last year to May this year, the name of this fund frequently appeared in the titles Bloomberg and Reuters:
Nvidia declared on the 13th D, Tesla made a profit of over 1.1 billion in the privatization incident, US Dollar, Green Energy Technology Series B appeared in the list of investors at the same time as Elon Musk.
At this moment, they finally knew that it was not some strange offshore institution far away in Cayman Islands, but that it belonged to Zhao Chen.
The person in front of them who has worked with them for so long is the head of Era Vanguard who has made great changes in the US Stocks market.
"Era Vanguard belongs to Zhao Zong."
Shen Jue repeated it, not as a rhetorical question, but as a way to help himself digest the information by saying it in his own mouth.
Then he leaned back in his chair, exhaled a long breath, and there was a hint of a wry smile or admiration at the corner of his mouth.
"No wonder. No wonder Era Vanguard will lead the investment in Green Energy Technology. No wonder Elon Musk, the world's richest man who has never invested in China, will join the investment.
We always thought that you and Elon Musk had a personal relationship. In fact, you did have a personal relationship--
The personal relationship allowed him to invest his personal funds in a Energy Storage Materials start-up company Shanghai Zhangjiang
But the personal relationship cannot allow him to use Tesla Materials Laboratory resources to do Independent Testing verification for an external entrepreneurial team.
What allowed him to do this was not personal relationships, but shareholder relationships.
Era Vanguard is Major Shareholder of Tesla, and is also the most important early investor of Green Energy Technology.
From beginning to end, he is not helping your friends, but helping his own shareholders realize the potential of technology."
Independent Director Sun Zhengping pushed up the reading glasses.
"Zhao Zong, looking back at the games at the Green Energy Technology negotiation table, you said at the time, 'CATL was not cooperative, and Bidiya.
Bidiya is not cooperative, and Tesla.' We thought that was a negotiation strategy.
Now it seems that this is not a strategy, but a statement of facts. Tesla's Supply Chain door was already knocked open by you at that time."
Shen Jue laughed, leaned back in his chair and stared at the chandelier on the ceiling, as if he was rewinding the account books of the past two years.
Zhao Chen didn't answer, but listened quietly, letting everyone connect the key points one by one.
In the Video Conference picture, Song Zhongping slapped the table. There was no anger, only a sense of relief that "I finally understand."
Chen Qiming lowered his head and circled the book value of Green Energy Technology in Henglong Financial Report from the cost method column, and marked a line in the blank space to go back and re-evaluate.
Chen Wei put the pen next to the notebook, leaned back on the chair and sighed. She had always been curious about why Zhao Chen was so determined to transform Henglong into an investment holding platform.
Now the answer is all put together - Henglong is not a transformation, but a mirror image of an offshore fund of the size of Ten-Billion-US-Dollar.
As for the compensation commitment for pledge financing, no one asked carefully.
Xu Yong and Wu Hongyuan flipped through the terms of the compensation plan and read it.
Compensating Listed Company Two Hundred Million Hong Kong Dollar every year is not difficult to bear for Zhao Chen, who now frequently mobilizes billions of US Dollar, and it can also be regarded as an explanation to the shareholders.
After a brief discussion among several people, Song Zhongping took the lead in waving his hand and saying that he had no objection;
Shen Jue added a sentence, suggesting that Liu Mingyu write a more complete compensation plan when drafting the pledge announcement, and regularly disclose the implementation of the compensation to avoid repeated questioning by subsequent supervision.
When everyone reluctantly turned their attention away from Era Vanguard, Liu Mingyu announced that the voting process was in progress.
Two issues - a statement on how the funds will be used and a plan to reimburse them - were unanimously approved in less than three minutes.
There were no objections, no abstentions, and no additional questions.
The whole Board of Directors ended in such a hazy way.
After Board of Directors ended, Liu Mingyu immediately submitted the stamped pledge announcement and compensation commitment letter to the Hong Kong Stock Exchange HKEXnews platform.
The core terms of the announcement have been revised repeatedly within Henglong--
Controlling Shareholder Zhao Chen pledged all the 360 million shares it held in order to eliminate the adverse effects caused by violating the promise of "no reduction or pledge".
Zhao Chen himself voluntarily pays 200 million Hong Kong Dollar to Listed Company Henglong Group as compensation every year until all shares are released from pledge.
The announcement specifically emphasized that this compensation will not be included in the income statement and will not affect the net profit for the year.
It is directly included in the capital reserve and earmarked for special use. The supervision committee composed of Independent Director reviews the arrival and use of each fund.
As soon as the announcement came out, the market went crazy in less than half an hour.
Alerts popped up on the terminals of domestic leader Financial Media and the research teams of major brokerages almost simultaneously, and the brief silence during trading hours was filled with dense real-time comments.
The title of Sina Finance is "Promise not to pledge but pledge backhand, Henglong Major Shareholder will pay Two Hundred Million unprecedented compensation every year";
The title of East Money added the sentence "far exceeds the regulatory fine limit". The discussion forums of Snowball and Futu are also flooding the screen.
After the opening of Hong Kong Stocks, the stock price of Henglong hardly made any correction. It opened moderately higher by less than half a point in early trading. By midday, the increase narrowed to barely flat.
It seems that there is no sudden increase, but the trading volume continues to increase, showing that the heavy selling orders were quietly taken over by the more determined Long-term Capital.
The reason why the market was surprised is that this approach has almost no precedent in Hong Kong Stocks or even the entire domestic capital market.
The legal status of voluntary commitment announcements such as "no reduction" and "no pledge" has long been in a gray area:
These clauses usually appear in Prospectus or voluntary announcements, and their legal effect is highly dependent on the specific circumstances. Some are considered to have contractual effect, while others are only regarded as non-binding moral declarations.
Shareholders who violate such promises often only receive relatively mild penalties such as a notice of criticism from the exchange, a warning letter from the Securities Regulatory Bureau or an order to make corrections, and rarely involve civil compensation of real money.
Even in the past two years, under New Securities Law, there has been the first case in the country where directors, supervisors and senior executives were ordered to compensate investors because they failed to fulfill their public commitment to increase their shareholdings. The amount of compensation was only a few hundred thousand yuan.
The reason why this Henglong case exploded was not because of the breach of trust itself, but the amount of compensation--
Every year Two Hundred Million Hong Kong Dollar is written in the official pledge announcement and has full legal effect, and the compensation object is Listed Company itself rather than individual investors who defend their rights.
This means that Major Shareholder has directly shouldered the indirect losses of all shareholders.