China Securities Regulatory Commission issues advance penalty notice to Yuandao Communication over 2019 to 2022 revenue overstatement with proposed CNY 238.84 million fine and mandatory delisting risk

The China Securities Regulatory Commission has issued an advance notice of administrative penalties in the financial fraud case involving Yuandao Communication Co Ltd after finding that the company overstated revenue from 2019 to 2022. The regulator said the conduct may constitute fraudulent issuance and unlawful disclosure in periodic reports, and it proposes to fine the listed company CNY 238.84 million, fine three responsible individuals a combined CNY 18 million, and impose five-year securities market bans on relevant personnel. The case is also considered to potentially meet the criteria for mandatory delisting for major violations, and the Shenzhen Stock Exchange will initiate the delisting process. The commission has frozen accounts related to Yuandao Communication's raised funds and is investigating the conduct of intermediary institutions involved in the case. It added that any leads that may involve criminal offences will be transferred to public security authorities in line with the Criminal Law and the criminal case filing and prosecution standards issued by the Supreme People's Procuratorate and the Ministry of Public Security.