The China Securities Regulatory Commission has ordered Yanzhou Coal Mining to rectify various governance and accounting irregularities by the first quarter of next year. In a statement, the company said the commission found the irregularities during a random on-site inspection. Yanzhou Coal was told to strike out a provision in its articles of association allowing connected parties to vote in 'special circumstances'. The company was also found to have failed to comply with requirements in its articles of association, including those relating to minutes-keeping of board meetings. On its accounting, Yanzhou Coal was said to have reported 56.64 million yuan of current port transport costs as deferred expenses. It also prepaid 574 million yuan to its parent for the acquisition of a 95.67 per cent stake in a coal project before the transaction was approved by the government. While it was supposed to pay 40 million yuan annually for three years for certain railway assets to its parent, it amortised the 120 million yuan as goodwill for 10 years. Daiwa Securities metals and mining analyst Geoffrey Cheng Bik-hoi said the effect of irregularities on profit and loss accounts was not significant compared with its total net profit. Chief financial officer Wu Yuxiang told reporters in a teleconference that the company was still in negotiations with its auditor on the level of provisions on land acquisition and village removal costs after it encountered sharply higher removal costs this year. The company risks overstating its profit if it insists on maintaining the current level of provision, Mr Cheng said. Mr Wu expected the coal price to rise 2 to 3 per cent in the fourth quarter, after falling 2.5 per cent in the third quarter, as demand picks up.