Between 2020 and 2022, *ST Lida and its subsidiary Kehuasheng transferred a total of 1.703 billion yuan to the controlling shareholder and related parties under the guise of labor or project advance payments, channeled through intermediary firms. Notably, one of these intermediaries shares the same registered business address as Kehuasheng. Recently, *ST Lida received an advance notice of administrative penalties, yet its share price surged 6.36% following the announcement.

A 38.4 million yuan preliminary fine has been issued, yet *ST Lida shares rallied sharply. On the evening of September 7, *ST Lida (603828.SH) announced receipt of the "Advance Notice of Administrative Penalties" from the Jiangsu Securities Regulatory Bureau. An investigation revealed that from January 2020 to December 2022, *ST Lida and its subsidiary Kehuasheng, without any underlying business substance, transferred funds to bank accounts of the controlling shareholder Kelida Group and to one of the actual controllers and then-chairman Gu Yiming, through intermediaries including Jiangsu Senbang Construction Labor Services Co., Ltd., Suzhou Chiguan Prefabricated Construction Technology Co., Ltd., and Sichuan Zhuye Construction Engineering Co., Ltd., all nominally for labor or project advance payments.

These actions constituted related-party transactions, resulting in non-operational fund occupation by related parties totaling 1.703 billion yuan. The annual occupation amounts broke down as 449 million yuan in 2020, 656 million yuan in 2021, and 597 million yuan in 2022, representing 27.61%, 51.90%, and 66.05% of the company's reported net assets in those respective periods. The outstanding occupation balances were 294 million yuan at the end of 2023, 117 million yuan at the end of 2024, and 117 million yuan at the end of June 2025, accounting for 37.94%, 15.02%, and 14.86% of reported net assets, respectively.

*ST Lida failed to disclose these related-party non-operational fund occupations in a timely manner and omitted them from its annual reports for 2020 through 2023, constituting major omissions in those periodic reports. Furthermore, in both the 2024 annual report and the 2025 semi-annual report, *ST Lida stated that in 2023, related-party non-operational fund occupation amounted to 170 million yuan with a remaining balance of 4.9033 million yuan in interest, and claimed that related parties had repaid the principal by the end of 2024 and the interest before the announcement date. These statements were inconsistent with actual facts, rendering the 2024 annual report and the 2025 semi-annual report materially misleading. As of April 22, 2026, the related parties have fully repaid all occupied funds and interest.

Given the above circumstances, the Jiangsu Securities Regulatory Bureau intends to order *ST Lida to rectify the issues, issue a warning, and impose a fine of 9 million yuan. Five responsible individuals, including Gu Yiming, face warnings and fines ranging from 2.1 million to 16.2 million yuan. The combined preliminary penalties amount to 38.4 million yuan. Additionally, Gu Yiming, as the actual controller and then-chairman, organized and executed the fund occupation and directed the company's illegal information disclosure, which is deemed egregious. The Bureau plans to impose a five-year market entry ban on him.

Unusually, on the trading day following the disclosure of the preliminary penalty (September 8), *ST Lida shares hit the daily limit during the pre-market auction and closed up 6.36%. Market observers suggest this may be linked to a potential change in control. In January 2026, actual controllers Gu Yiming, Gu Longdi, and Gu Jia signed a share transfer agreement to sell 100% of Kelida Group to Shanghai Yingzhong Intelligent Technology Co., Ltd. Upon completion, the direct controlling shareholder of *ST Lida would remain Kelida Group, but the indirect controlling shareholder would become Yingzhong Intelligent, with actual control shifting to Cao Yalian and Liu ChunJian.

In March 2026, the China Securities Regulatory Commission initiated an investigation into *ST Lida and Gu Yiming. At that point, Yingzhong Intelligent had already paid 80 million yuan in deposits and advance payments but had not completed the share transfer, primarily due to conditional restrictions. According to the "Interim Measures for the Administration of Share Reduction by Listed Company Shareholders," controlling shareholders and actual controllers are prohibited from reducing their shareholdings if the listed company is under investigation by the CSRC for suspected securities or futures violations, or has been subject to administrative penalties or criminal sentences within the preceding six months. With this preliminary penalty issued, *ST Lida may soon meet the conditions for the share transfer, moving the ownership change forward.

The three "intermediaries" named in the penalty notice have all previously appeared in *ST Lida's disclosures. Among them, Jiangsu Senbang and Suzhou Chiguan had been previously identified as fund pass-through channels. In October 2023, *ST Lida's subsidiary Kelida Asset Management signed a 399 million yuan server procurement contract with Shanghai Yingzhong Electronics Sales Co., Ltd. In December, Kelida Asset Management pledged 170 million yuan of its fixed deposits to Yantai Hekang Materials Co., Ltd., a third party designated by Yingzhong Electronics, which issued bank acceptance bills, treating the amount as an advance payment of 170 million yuan for server lock-in deposits to Yingzhong Electronics.

In July 2024, when responding to an exchange inquiry, *ST Lida stated that the funds did not flow through Yingzhong Electronics for off-balance-sheet circulation or to the controlling shareholder, actual controllers, or their related parties. However, in the 2024 annual report, the company disclosed that the controlling shareholder eventually transferred funds through designated third parties, creating non-operational fund occupation. At that time, *ST Lida stated that by the end of 2024, the 170 million yuan occupation had been repaid through six companies, including Jiangsu Senbang and Suzhou Chiguan.

The other intermediary, Sichuan Zhuye Construction, was previously a subsidiary of Sichuan Zhuye Construction Co., Ltd. According to *ST Lida's earlier disclosures, subsidiary Kehuasheng, as the lead entity, formed a consortium with *ST Lida and Zhuye Construction to win a PPP project for the second phase of the Xichang First Ring Road Historical Style Core Area and the second phase of the urban lighting project in late 2018. Kehuasheng was responsible for the design portion, while the construction work was subcontracted to Sichuan Zhuye Construction. *ST Lida claimed that due to timing differences between audit tracking progress and actual construction progress, it recorded other receivables from Zhuye Construction and Sichuan Zhuye Construction, with balances of 162 million yuan and 196 million yuan at the end of 2021 and 2022, respectively, all fully recovered in 2023.

However, the penalty notice indicates that between 2020 and 2022, *ST Lida and Kehuasheng transferred funds to the controlling shareholder and related parties through intermediaries, including Sichuan Zhuye Construction, under the guise of labor or project advance payments. Notably, according to business registration information, a shareholder of Zhuye Construction shares the same name as a former shareholder of Chengdu Zhongzhulian Construction Engineering Design Co., Ltd., which holds a 20% minority stake in Kehuasheng. Additionally, in May 2024, Sichuan Zhuye Construction underwent a shareholder change, and its registered and mailing addresses before and after the change are both at Xing* Road No. 100, Chengdu Jinniu High-Tech Industrial Park, the same location as *ST Lida's subsidiary Kehuasheng.

Both signing certified public accountants have previously faced penalties. Rongcheng Accounting Firm (Special General Partnership) issued standard unqualified audit opinions on *ST Lida's financial reports and internal controls for 2020 to 2022, but in 2023 issued a qualified financial audit opinion and an adverse internal control audit opinion, both related to the 170 million yuan advance payment to Yingzhong Electronics. The accountants stated that *ST Lida did not provide sufficient information and that they were unable to obtain sufficient and appropriate audit evidence regarding the business substance of the matter.

Zhongxing Caiguanghua Accounting Firm (Special General Partnership) issued an unqualified audit opinion with an emphasis of matter paragraph on *ST Lida's 2024 financial report, with the emphasis still on the 170 million yuan non-operational fund occupation, while also issuing an adverse opinion on the company's internal controls. The signing CPAs for this audit were Tang Yang and Lou Jianan. Tang Yang received a warning letter from the Zhejiang Securities Regulatory Bureau in March 2026 in connection with the 2024 annual audit of Zhejiang Dongwang Times Technology Co., Ltd., for deficiencies in control testing, substantive procedures, and errors in audit working papers.

Lou Jianan was issued a warning and fined 500,000 yuan by the CSRC because the 2022 and 2023 annual audit reports he signed for Jiangsu Wuzhong Pharmaceutical Development Co., Ltd. contained false statements. According to the CSRC investigation, Jiangsu Wuzhong inflated revenue, costs, and profits through non-substantive trading with affiliated companies, and provided funds to related parties through non-substantive procurement payments, creating non-operational fund occupation. Although Jiangsu Wuzhong's 2022 and 2023 financial statements received standard unqualified audit opinions, Lou Jianan and others failed to exercise due diligence during the audit, including failing to notice that advance payments were inconsistent with credit policies and failing to maintain professional skepticism regarding abnormal payment activities and the reasonableness of large advance payment refunds.