*ST Changyao Executives Fined 33 Million Yuan; Company to Enter Delisting Review Period on March 20

After the penalty of delisting due to financial fraud was implemented, the fines imposed on the senior management of *ST Changyao (300391) have also been officially issued. On March 18, the relevant personnel of *ST Changyao received the “Administrative Penalty Decision” issued by the China Securities Regulatory Commission (CSRC), with 14 former senior executives facing a total fine of 31 million yuan.

Specifically, Luo Ming, the former General Manager and Director of *ST Changyao, will be given a warning and fined 5 million yuan. The CSRC also pointed out that Luo Ming’s illegal activities severely disrupted the securities market order, and decided to impose a lifetime securities market ban on him. Luo Ming was identified as the person directly responsible for false disclosures in the 2021-2023 annual reports of *ST Changyao and had made decisions to carry out financial fraud at Changjiang Yuan and Xin Feng Pharmaceutical.

Yang Zhenghui, who was actually responsible for sales and procurement at Changjiang Yuan and Xin Feng Pharmaceutical during the case period, will be given a warning and fined 3 million yuan. The CSRC also noted that Yang Zhenghui’s illegal conduct was serious, and decided to impose a 10-year securities market ban on him. Yang Zhenghui was found to have arranged personnel to produce false inbound and outbound warehouse documents and organized the financial fraud at Changjiang Yuan and Xin Feng Pharmaceutical.

The remaining 12 senior executives were all given warnings by the CSRC and fined between 1 million and 3 million yuan.

*ST Changyao had previously been found to have inflated its operating income by 215 million yuan, 284 million yuan, and 234 million yuan in 2021-2023, accounting for 9.12%, 17.57%, and 19.51% of the disclosed operating income for those periods; the corresponding inflated total profit was 56.4 million yuan, 63.37 million yuan, and 43.7 million yuan, accounting for 35.62%, 88.23%, and 6.42% of the disclosed total profit for those periods. Additionally, in 2022, the company artificially inflated its profit by 4.55 million yuan due to unrecognized losses related to the Changjiang Weichuang Chinese Medicine City Trading Center project, which accounted for 6.34% of the disclosed profit for that period.

On January 23, *ST Changyao received the “Administrative Penalty Decision” from the CSRC, as the company’s 2021-2023 annual reports contained false disclosures. The CSRC ordered the company to rectify, issued a warning, and fined 10 million yuan.

Due to the occurrence of major illegal violations leading to mandatory delisting, *ST Changyao has been decided by the Shenzhen Stock Exchange to terminate its listing. The company will enter a delisting risk warning period starting March 20, which lasts for fifteen trading days, with the final trading date expected to be April 10. After delisting, the company’s shares will be transferred to the National Equities Exchange and Quotations (NEEQ) for trading.

Regarding the *ST Changyao case, the CSRC has stated that it will also investigate the practices of intermediary agencies involved. If violations are found, they will be punished according to law. For potential criminal clues, the CSRC will adhere to the principle of transferring cases to public security authorities as appropriate, strictly following regulations.

According to the latest disclosures, *ST Changyao and its subsidiaries have been involved in lawsuits and arbitration cases totaling approximately 51.45 million yuan over the past twelve months, accounting for 11.89% of the most recent audited net assets. Additionally, some investors have filed rights protection claims against *ST Changyao. Lawyers believe that two types of investors are likely to recover losses:

1. Investors who bought *ST Changyao shares between March 30, 2019, and April 29, 2024, and still hold the shares as of the close on April 29, 2024;
2. Investors who bought shares between April 28, 2022, and November 7, 2025, and still hold the shares as of the close on November 7, 2025.