Chapter 75.2: Winning One's Heart
The next day, Chu Qianmiao and the
others, led by Ren Yan, officially moved into Liya Manufacturing.
In addition to their brokerage,
lawyers, accountants, and appraisers also arrived. Each organization, each
fulfilling its duties, bustled into a frenzy of activity.
While conducting due diligence on
Liya Manufacturing's history and equity changes, Chu Qianmiao discovered a
rather peculiar phenomenon.
At the time of Liya Manufacturing's
founding, the company's legal representative and controlling shareholder was a
man named Qian Fendou, not Qian Siji. It wasn't until three years ago that the
legal representative and controlling shareholder shifted from Qian Fendou to
Qian Siji.
Chu Qianmiao recalled what Qian
Siji had said during their previous meeting. He had claimed he had founded the
company.
So, what was going on? Why wasn't
he the legal representative and controlling shareholder?
She brought this up with Ren Yan,
who raised an eyebrow and said, "It's probably a proxy holding."
Chu Qianmiao exclaimed,
"Huh?" "That's a bit surprising."
The practice of proxy holding of
corporate shares is not uncommon, but the amount of shares held is generally
not large. Holding shares of the controlling shareholder like this is quite
rare.
Ren Yan glanced at her and said,
"Stop singing along. Go check in with Qian Siji instead."
Chu Qianmiao rubbed her nose and
said, "Okay."
But she couldn't get Qian Siji
available. She wasn't Ren Yan, and no matter how affable the chairman was, he
couldn't possibly be personally involved with a senior manager like her. In the
end, Ren Yan stepped in and secured an appointment with Qian Siji.
Ren Yan took her to Qian Siji's
office. Qian Siji and Ren Yan chatted while he asked his assistant Ke Mingjun
to answer Chu Qianmiao's questions.
Ke Mingjun gently told Chu
Qianmiao, "Oh, here's the thing. Qian Fendou is our CEO Qian's cousin.
When Liya Manufacturing was first established, it wasn't convenient for our CEO
Qian to hold shares, so he asked his cousin to do it for him."
Chu Qianmiao thought, wow, it
really is a proxy holding.
She asked Ke Mingjun, "Why
didn't Mr. Qian hold the shares directly at that time?"
Ke Mingjun looked at her and asked,
"You really need to get to the bottom of this."
Chu Qianmiao was stunned. She
quickly glanced at Ren Yan and Qian Siji.
Qian Siji seemed oblivious to the
noise; he was still talking to Ren Yan.
Chu Qianmiao thought for a moment,
raised her voice slightly, and said to Ke Mingjun with a smile, "Assistant
Ke, you may have misunderstood. Regarding the issue of proxy holding, I'm not
asking about it out of personal curiosity. The truth is, if there's a history
of proxy holding in a prospective listed company, regulatory agencies will pay
close attention to this issue. Mr. Qian Fendou is holding shares on behalf of
the controlling shareholder, which is quite rare, so we need to conduct a
thorough due diligence."
Ke Mingjun adjusted his gold-rimmed
glasses and said, "I see."
Chu Qianmiao thought she had
convinced him. The next second, Ke Mingjun asked, "Is there any specific
legal basis for this?"
Chu Qianmiao had a vague feeling
that Ke Mingjun was quite difficult to deal with.
She heard a pause in the
conversation between Ren Yan and Qian Siji. She figured Qian Siji had probably
turned his attention to them.
Luckily, she had a law degree and
was well-versed in the regulations, easily able to articulate them. She told
both Ke Mingjun and Qian Siji, "Of course there is. According to the
Measures for the Administration of Initial Public Offerings and Listings and
the Measures for the Administration of Initial Public Offerings and Listings on
the Growth Enterprise Market, the equity of prospective listed companies must
be clear, and there must be no ownership disputes over the shares held by
controlling shareholders. This requires that the true shareholding relationship
must be established."
Ke Mingjun adjusted his glasses,
said nothing, and turned to glance at Qian Siji.
Qian Siji smiled and pondered.
Ren Yan spoke up at the right
moment, "Mr. Qian, Xiao Chu is right. The issue of proxy holding has
always been a major concern for regulators during the IPO process. They
particularly focus their scrutiny on the true reasons for the proxy holding and
its rationale, as well as whether the proxy holding relationship was terminated
before IPO, whether the termination process was legitimate and effective, and
whether there were any potential disputes."
Chu Qianmiao noticed an
inexplicable authority in Ren Yan's words. If she had said the same thing, Qian
Siji might have shrugged it off, but when Ren Yan spoke, Qian Siji nodded
repeatedly and told Ke Mingjun, "Listen to Mr. Ren. He has the most experience.
From now on, answer whatever he asks. Don't be shy."
She figured that aura wasn't
something everyone possessed, and she needed to cultivate it.
Ke Mingjun quickly responded with a
"Yes, Chairman."
Qian Siji turned to Ren Yan and
smiled, "I know. Going public means laying everything out in front of
everyone. Showing them that I'm fine and my company is great will only lead
them to buy Liya's stock and drive Liya's market value up."
Qian Siji instructed Ke Mingjun to
answer Chu Qianmiao's every question and tell him everything he knows.
After leaving Qian Siji's office
and heading back to the due diligence office, Ren Yan asked Chu Qianmiao,
"What do you think of those two people just now?"
Chu Qianmiao paused and said,
"Qian Siji seems more open-minded and broad-minded, while his assistant
seems a bit petty and secretive. But the more this is, the more it speaks
volumes, because it's Qian Siji who's being secretive; Ke Mingjun is probably
just following his orders."
Ren Yan paused and looked at Chu
Qianmiao.
Chu Qianmiao also paused, turning
to ask Ren Yan, "What's wrong, Mr. Ren? Did I say something wrong?"
Ren Yan raised the corner of his
mouth at her and gave her a faint smile. "Yes." After a pause, he
said, "You've finally been able to put aside your emotional facade and
look rationally at the deeper essence. That's great."
Chu Qianmiao was stunned.
He was praising her again. He was
praising her like he was free these days, showering her with praise at every
turn, unafraid of her pride.
Ren Yan stepped forward again,
instructing Chu Qianmiao as he walked, "Since Qian Siji has been evasive
about his stance on the proxy holding, there's definitely something fishy going
on. You need to investigate thoroughly." After a pause, he offered some
advice, "Have someone at the legal department work with you. Interview
both Qian Siji, the actual investor, and Qian Fendou, the nominal investor,
separately to determine the reasons for the proxy holding. Remember to have
them sign the interview outline for written confirmation after the
interviews."
"Also, first get a resume for
Qian Siji, the actual investor. It should include his education, professional
background, work experience, family relationships, and so on."
Based on this, we can further
assess the legitimacy of the reasons for the proxy holding.
He walked forward as he spoke, one
hand in his trouser pocket, his steps steady, his decisions decisive, and his
instructions clear.
Chu Qianmiao watched his back and
quickly followed him. She found it strange that he seemed to glow when he
worked.
She said "Okay" and
immediately got to work.
Chu Qianmiao asked Ke Mingjun for a
copy of Qian Siji's resume. She also requested a copy of Qian Doudou, Qian
Siji's uncle.
According to the interview, Qian
Siji stated that when Liya Manufacturing was founded, he had other work, making
it unsuitable for him to become a controlling shareholder.
According to regulations,
government employees, civil servants, military personnel, heads of state-owned
enterprises, and the issuer's major customers and suppliers are prohibited from
investing in a company and becoming shareholders.
Chu Qianmiao compared Qian Siji's
resume and discovered that while Qian Siji did hold a job when Liya was
founded, it wasn't within the government, nor did the company he worked for
have any overlap with Liya Manufacturing, nor was it a state-owned enterprise.
Given these circumstances, it stands to reason that Qian Siji's direct
shareholding in Liya Manufacturing was perfectly fine, and there was no
inconvenience involved.
Thus, Qian Siji's claim that his
current work made it difficult for him to hold shares is unfounded.
After two rounds of investigation
into the proxy holding situation, the truth seems to be slipping further and
further away. The more Chu Qianmiao considered this, the more she felt that
this proxy holding was more complex than it actually was, and that there was
likely some hidden agenda.
Chu Qianmiao reported the results
of the new round of due diligence to Ren Yan. Ren Yan paused for a moment, then
said, "It seems that work inconvenience is just an excuse. There must be
other reasons, most likely an attempt to conceal the source of his investment.
However, the issue of investment will be a key focus during the IPO meeting.
Therefore, you should contact Qian Siji to clarify the source of his initial
funding for Liya Manufacturing." Chu Qianmiao began to investigate the
source of his capital.
Qian Siji's response to this
question was clear: "The money I used to start the company came from my
savings. I had several houses, which I sold and cashed out. Also, I previously
had a trading company that my wife and I co-founded, and we made some money
from that."
Chu Qianmiao asked how the trading
company was doing now.
Qian Siji said it had been
deregistered.
He reassured Chu Qianmiao, saying,
"Don't worry, I didn't deregister because I was afraid of an audit. I did
it to focus on my career. All the company's financial records are still
there." He also instructed Ke Mingjun to send the trading company's
accounts to the due diligence office for Chu Qianmiao and the others to review.
Chu Qianmiao, Qin Qianyu, and Liu
Lifeng reviewed the accounts and found no issues.
So, the source of the investment
was correct.
"Then why did Qian Siji ask
his cousin Qian Fendou to hold the shares on his behalf? Isn't that
unnecessary?" Liu Lifeng asked, voicing everyone's doubts.
Qin Qianyu told Chu Qianmiao,
"Regulators are very concerned about the issue of proxy holding. We must
understand this, otherwise it feels like a trap that will leave us feeling
uneasy."
Chu Qianmiao agreed. If she didn't
understand the proxy holding issue, she would remain uneasy.
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