CSRC orders Founder Securities to change its directors, supervisors
China's securities watchdog reprimands company and instructs it to meet and vote on appointing new directors and supervisors before February 16
The China Securities Regulatory Commission (CSRC) has reprimanded Founder Securities for violating mainland company law, and ordered the Shanghai-listed firm to change its board of directors and board of supervisors, Founder Securities announced on the Shanghai Stock Exchange website.
Founder Securities was recently embroiled in a bitter dispute with its second-largest shareholder, Beijing Zenith Holdings, which had complained that Founder refused to change its directors and supervisors to include members nominated by Zenith.
As a result of the refusal, Zenith, a mainland property developer, launched lawsuits against Founder and publicly accused several former top executives of Founder Group, the parent of Founder Securities, of various crimes including embezzlement, fraud and bribery.
On January 4, four former senior Founder Group executives were asked to assist in investigations by the mainland authorities.
"Your company's corporate governance is weak and internal controls are inadequate," the CSRC said in a letter to Founder Securities, which the brokerage received on January 29.
On January 22, Founder Securities announced that Beijing Zenith Holdings, the second biggest shareholder of Founder Securities, asked Founder Securities to cancel an extraordinary general meeting scheduled for February 12.
In its letter, the CSRC said Founder Securities had not announced it would cancel the meeting, and thus had violated mainland company law.