On November 3, ST Hengxin, a publicly traded company in China, announced that 18 out of its 19 bank accounts have been frozen, significantly affecting its financial operations and business management.
As reported by a financial news outlet, as of the same day, all but one account, held at the Hangzhou Bank’s Beijing branch, has been frozen. Among these, one account was specifically designated for holding raised funds, which had a balance of 12.01 million yuan (approximately $1.8 million) as of October 29. All funds in this account have also been completely frozen.
In its announcement, the company stated that the freezing of these accounts has caused “severe impacts” on its financial operations and management strategies. The newly frozen accounts involve property preservation measures taken by the Dongcheng District Court in Beijing and the Chengzhong District Court in Xining.
Due to the freezing of its primary bank accounts, the company’s stock is now required to add an “Other Risk Warning” to its trading symbol. In the A-share market of China, the prefix “ST” indicates that a stock faces trading risk due to issues such as operational difficulties or lack of disclosure.
ST Hengxin, formally known as Hengxin Oriental Culture Co., Ltd., is listed on the Shenzhen ChiNext board, with business activities spanning internet video services, digital creativity, and computing power services.
Earlier in August, the company disclosed that funds from 29 of its bank accounts, including those belonging to its subsidiaries, had been partially frozen, with the actual amount frozen totaling approximately 45.34 million yuan. At that time, the company stated that the remaining accounts could still be used and that this would not cause “substantial impacts” on its daily operations and functionality.
However, in its latest announcement, the company revealed that the former chairman still holds the old business license and the reserved bank seal, thereby controlling the operational permissions of the affected accounts. The bank has requested verification of the reserved seal before it can provide details about the freeze, yet the seal has yet to be retrieved, and the necessary changes have not been completed, hindering inquiries regarding the freeze.
Previously, a business registration change initiated by the company at the end of July was revoked in September due to discrepancies between submitted materials and original documents. Following this, the company announced that the legal representative listed on its business license remains the previous chairman, Meng Nan.
The company indicated that it has yet to receive any legal documents related to the account freeze from the authorities directly and is in the process of handling the changes for the reserved seal while seeking information on related cases.
ST Hengxin has already been subjected to an “Other Risk Warning” since April 8 of this year due to inflation of revenue in its 2022 annual report, which led to a change in its stock symbol from “Hengxin Oriental” to “ST Hengxin.”
The administrative penalty decision previously issued against the company indicated that it inflated its reported revenue by approximately 182 million yuan, constituting 37.12% of its originally disclosed revenue for that year. Consequently, the company was fined 5 million yuan for this transgression.
According to the company’s third quarterly report, its revenue for the first three quarters of this year was around 202 million yuan, representing a year-on-year decline of 22.19%. Additionally, the net loss attributable to shareholders of the listed company was approximately 152 million yuan.
The report outlined that board member Sun Fengjun cast a vote of abstention, expressing concerns about the report’s authenticity, accuracy, and completeness. He mentioned that both the company and its actual controller have been under investigation since July for suspected violations related to information disclosure. Additionally, the former chairman, Meng Nan, has faced criminal coercive measures. The investigation remains ongoing, and he cannot rule out the potential impact of these matters on the financial report.