After About 6 Years of "Fund Occupation Shadows" Finally Dispersed, Yangzi New Materials' 18.62 Million Yuan Fund Execution Completed

Yanziji New Material (SZ002652) disclosed the latest progress on shareholder Hu Weilin’s capital occupation issue on March 13, 2026, announcing that the nearly six-year-long problem has finally been fully resolved.

The announcement shows that the company, through enforcement procedures, ultimately recovered 18.6265 million yuan, marking the end of a violation involving capital occupation of over 300 million yuan that previously triggered disciplinary actions by the Shenzhen Stock Exchange and penalties from the China Securities Regulatory Commission.

Yanziji New Material clearly stated in the announcement that Hu Weilin’s capital occupation has been fully repaid, and the related funds have been returned to the company’s account. The negative impact of this issue on the company’s operations has been eliminated.

From 2018 to 2020, Hu Weilin was the second-largest shareholder and the then General Manager of Yanziji New Material.

The latest announcement reveals that during a self-inspection in 2020, the company discovered that shareholder Hu Weilin had occupied company funds through a major supplier, Suzhou Huifeng Yuan Material Trading Co., Ltd. (hereinafter referred to as Huifeng Yuan). In 2019, Yanziji New Material prepaid Huifeng Yuan 340 million yuan, which was an excess prepayment by Hu Weilin, and by lending funds to Huifeng Yuan, resulted in capital occupation.

Starting from that year, the company began addressing this shareholder capital occupation issue.

The timeline shows that as of December 31, 2020, Hu Weilin’s outstanding capital occupation reached 304 million yuan.

Subsequently, the company gradually recovered the owed funds through various methods. By April 28, 2021, the outstanding amount decreased to 272 million yuan. By August 25, 2021, it further reduced to 268 million yuan. By November 10, 2021, the balance was 246 million yuan. By December 1, 2022, the amount had significantly dropped to 56.094 million yuan.

In 2023, the company continued efforts to recover the funds. By April 25, 2023, the balance was 47.4282 million yuan.

In May 2024, the listed company submitted a “Change of Litigation Request,” adjusting the amount Hu Weilin should repay from 48.6588 million yuan (including interest) to 18.5801 million yuan (including interest). In August of that year, the court accepted the case.

By September 2025, the company withdrew the lawsuit. In November, both parties signed a “Repayment Agreement,” agreeing that Hu Weilin would repay the debt in a lump sum before December 10, 2025.

However, Hu Weilin failed to fulfill the repayment obligation on time. On December 30, 2025, the company applied for enforcement, and recently, 18.6265 million yuan was executed, thoroughly resolving this over six-year-long capital occupation issue.

The China Securities Regulatory Commission’s administrative penalty decision in November 2023 showed that Hu Weilin was given a warning and fined 5 million yuan for organizing and implementing illegal capital occupation and related violations.

This penalty reflects the regulatory authority’s zero-tolerance stance toward violations of capital occupation by listed companies.

Financially, the impact of the capital occupation has been evident in the company’s financial reports.

Starting in 2019, the company’s performance declined sharply, with net profit attributable to shareholders remaining negative from 2019 to 2022. The annual financial reports consistently mention the negative effects of capital occupation.

After returning to profitability in 2023, Yanziji New Material achieved operating revenue of 340 million yuan and net profit of 7.009 million yuan attributable to shareholders in 2024. Part of the profit was due to recovering 30.0787 million yuan of capital occupation funds and reversing bad debt provisions.

The company’s 2025 performance forecast indicates an expected net loss attributable to shareholders, partly because the non-recurring gains from recovering capital occupation funds in the previous year will no longer be present in 2025, leading to a net loss.

Beyond financial impacts, the company strengthened its internal control system after the incident.

In 2022, the company issued the “Management System for Preventing and Controlling Capital Occupation by Controlling Shareholders and Other Related Parties.” In August 2025, it revised this system, which helps prevent similar incidents from recurring.

The thorough resolution of the capital occupation issue has eliminated a major uncertainty in the company’s operations. With the funds executed, cash flow has improved, providing financial support for future development. The company also stated that the negative impact on operations has been eliminated.

Overall, the conclusion of the shareholder capital occupation incident marks an important step in restoring the company’s governance structure.