Shanghai DZH sued over Xiangcai merger and fundraising resolution

Shanghai DZH has received a lawsuit notice from the Pudong New Area People's Court in Shanghai, regarding a petition filed by Wang Gongwei. The plaintiff seeks to annul a resolution passed at Shanghai DZH's second extraordinary general meeting on October 13, 2025, which approved the share exchange merger with Xiangcai Co., Ltd. and associated fundraising. Wang Gongwei alleges Shanghai DZH failed to appoint a securities service institution to audit or evaluate Xiangcai’s overall assets, a requirement for major asset acquisition under exchange rules, and that the shareholder meeting did not review such reports, violating company and exchange regulations.

However, both Beijing Guofeng Law Firm and Guangzhou Kaipu Securities Co., Ltd., acting as independent financial advisors, have issued special verification opinions. They state that the transaction does not involve Shanghai DZH acquiring Xiangcai shares, cash, or other consideration, and thus does not constitute a "purchase or sale of assets" by Shanghai DZH. Consequently, they assert that Listing Rules provisions requiring an audit or valuation of Xiangcai’s financial reports are not applicable.

Furthermore, Grandall Law Firm (Shanghai), which witnessed the shareholder meeting, confirmed that the convening and voting procedures, as well as the resolutions passed, were in compliance with company law and Shanghai DZH's articles of association, deeming the resolution legally valid. Shanghai DZH plans to monitor the lawsuit and take appropriate legal measures.