ST Gaosheng (000971): Two Of The Directors Rejected The Audit.

*ST Gaosheng (000971) major shareholder has just filed for bankruptcy, and the company's backyard fires again. The company announced on the evening of July 15th that the twenty-eighth meeting of the ninth board of directors of the company recently approved the special audit of the company's wholly owned subsidiary, Jilin Gaosheng Technology Co., Ltd. However, Dong Hong and Xu Lei, director of the company, pointed out that there was no basis for *ST's special audit. *ST Gao Sheng had completed the annual audit and announced that he could not audit Gaosheng technology and interfere with Gaosheng technology operation because of the right to know.

It is worth noting that in February of this year, the *ST rose ninth times, and the board passed the relevant audit bill. The voting was 6 votes in favour of 2 abstentions. The Independent Director Tian Ying Chun and Zhao Liang abstained from voting. The directors Dong Hong and Xu Lei objected to the voting results and thought that the counting tickets were evasive. The relevant legal personages pointed out that audit matters should be implemented legally when the resolutions of the board of directors of the listed companies were passed legally.

In February 3, 2019, *ST held the twenty-eighth meeting of the ninth board of directors and deliberated and adopted the proposal to conduct a special audit of wholly owned subsidiary Jilin Gaosheng Technology Co., Ltd. and Shanghai Ying Yue Network Technology Co., Ltd., and agreed to conduct a special audit of Gaosheng technology and Shanghai Ying Yue to verify whether there is any post adjustment event that may lead to the retroactive adjustment of the financial report of Gaosheng technology and Shanghai Ying Yue performance commitment period and trigger the performance compensation obligations of the relevant entities.

*ST Gao Sheng introduced that in March this year, the company commissioned Dahua accounting firm to take charge of the special audit through bidding. Considering that there were more financial aspects involved in the first half of 2019, the company started the audit since July 2019, without affecting the normal work of its subsidiaries. In July 3rd, the company sent a notice to Gaosheng technology and Shanghai Ying Yue by mail, and asked the subsidiary to cooperate with the special audit work.

It is worth noting that *ST's auditor, who was commissioned by Gao Sheng, had a "closed door" in Gaosheng science and technology office. In July 4th, Gaosheng Technology issued a "resolution of Gaosheng board of directors" to the company and the board of directors by mail, and refused to accept the special audit arrangement of the board of directors. The resolution was signed by Yu Ping, Xu Lei and Weng yuan of all the board members of Gaosheng science and technology board. In July 9th, Dahua accountant office issued a letter of communication on special audit items to the company. The communication showed that auditors were not allowed to enter the office area after being accompanied by a company vice president of finance. The company's accompanying personnel contacted Yu Ping, executive director general, Xu Lei, chief financial officer Dong Hong, and three of them refused to carry out the audit. Based on the above situation, Dahua accounting firm can not carry out the special audit smoothly, and the company's special audit can not be carried out.

The director of the *ST raised objection that Gao Sheng Technology accused Gao Sheng of refusing to comply with the audit matters approved by the board of directors. Director Dong Hong and Xu Lei pointed out that Gaosheng technology has made it clear that the *ST high rise special audit has no basis. *ST Gaosheng has completed the annual audit and has announced. *ST Gao Sheng claims that shareholders have the right to know according to the company law, but they can not repeatedly audit Gao Sheng Technology on the basis of the right to know, interfere with the operation of Gaosheng technology; Gaosheng science and technology directors and executives perform their duties according to the articles of association, maintain the operation of Gaosheng technology, reject the unreasonable demands of the stock company, and do not have the situation that the subsidiary claimed by the mail is out of control.

"The listed companies are controlled by the controlling shareholders and related parties. They violate the guarantee and violate the common loan and provide a number of forged and false board resolutions, which harm the interests of the stock companies, shareholders and the controlling shareholder." Director Dong Hong and Xu Lei said that Dahua accounting firm was not an annual audit accounting firm hired by a listed company. The process of recruitment did not inform all directors, and the accounting office was required to be approved by the shareholders' meeting in accordance with the articles of association. Therefore, the audit of Dahua Accountants Affairs is lack of reasonable authorization.

Wang Zhihui, partner of Zhejiang Gao Ting law firm, told the China Securities Journal reporter that audit matters should be enforced when the resolution of the board of directors of the listed company was legally passed. "What demands of the other party can protect rights through legal means? But we must abide by the rules of the game, otherwise we will be confused.