Shanghai Gench Education reports late disclosure of wealth management products

Shanghai Gench Education Group Limited reported that it subscribed to various RMB-denominated structured deposits from several financial institutions in Mainland China. Individually, these subscriptions were below the 5% disclosure threshold. However, when aggregated by counterparty within 12 months, 48 subscriptions exceeded 5% but remained below 25%, thus qualifying as discloseable transactions requiring public announcement. The company's delay in disclosure was attributed to a mistaken belief regarding aggregation rules and the nature of these products as non-asset acquisitions.

The company has adopted remedial measures to enhance internal controls, including mandatory annual Listing Rules training for board and management, dual-approval systems for financial product transactions by the cfo and company secretary, and a centralized database for monitoring all wealth management product transactions. An IT specialist will update market capitalization daily in this database, generating reports for review to ensure timely detection of aggregation situations.

The wealth management products, acquired for treasury management, were from banks including Hua Xia Bank, Pudong Development Bank, China Merchants Bank, and China Construction Bank. Principal amounts ranged from RMB8m to RMB100m per transaction, with expected annual returns generally between 0.70% and 2.76%. All principal and investment returns were received upon maturity.