Nanshan Aluminum Major Shareholder "Goes Back on Word": After Promising "No Reduction" Front and Center, Cashing Out Over 700 Million on the Back End—Is This Operation Compliant?

Is there a regulatory blind spot in the timeliness standards for listed company information disclosure?

Ji Mian News Reporter | Niu Qichang

A share reduction announcement has put the aluminum industry leader Nanshan Aluminum (600219.SH) under scrutiny.

On March 16 and 17, Nanshan Aluminum’s controlling shareholder, Nanshan Group, and its concerted action, Shandong Yili Electric Co., Ltd. (“Shandong Yili”), reduced their holdings by 110 million shares through block trades, cashing out approximately 728 million yuan.

This share reduction itself is not unusual, but combined with the recent commitment from the major shareholder two months ago that “there are no plans to reduce holdings in the next three months,” and the company’s “simultaneous buyback and reduction” timing, it quickly sparked market doubts.

In response, Ji Mian News contacted Nanshan Aluminum’s securities department. A company official responded exclusively that the shares sold were from a 2016 private placement and comply with relevant laws and regulations.

Regarding the major shareholder’s “flip-flop,” the official stated that the previous statement from the major shareholder was “not a binding commitment,” and this reduction was “just a slight adjustment of the equity structure,” maintaining a long-term positive outlook on the company.

The Promise Lasted Only Two Months, Major Shareholder “Counterattacks”

Rewind to January 13 of this year.

At that time, Nanshan Aluminum issued a sincere share buyback plan: intending to use no less than 300 million yuan and no more than 600 million yuan of its own funds to repurchase shares for cancellation and reduction of registered capital, with a maximum buyback price of no more than 7.52 yuan per share.

Ji Mian News noted that one highlight of this buyback plan was the company’s clear stance on shareholder reduction plans. The announcement stated: “According to inquiries from the company, as of the disclosure date, the controlling shareholder and concerted parties have no plans to reduce holdings within the next 3 or 6 months.”

This commitment was interpreted by the market as a positive signal that the controlling shareholder and the listed company were aligned to maintain the stock price. At that time, Nanshan Aluminum’s stock price was still below 6 yuan, and the buyback plan was seen as a “confidence booster.”

Source: Announcement

However, just two months later, it was “face-slapped.”

On March 16 and 17, the concerted action of the controlling shareholder, also the largest shareholder, Shandong Yili, continued to reduce holdings via block trades, selling a total of 110 million shares. In just two days, Shandong Yili cashed out about 728 million yuan.

During these two trading days, Nanshan Aluminum’s stock price fell a total of 7.60%, with a single-day drop of 4.76% on March 17. In the following days, the stock continued to decline sharply, closing at 6.00 yuan per share on March 20, nearly 20% lower than before the reduction.

What’s even more unacceptable to investors is that just over a month before the reduction, Nanshan Aluminum was still reporting buyback progress—by February 28, it had repurchased 9.2597 million shares, spending about 65.4869 million yuan.

The company’s “real money” buyback contrasted sharply with the major shareholder’s “escape.”

Some Nanshan Aluminum investors expressed doubts to Ji Mian News, saying, “The company first announced a buyback, then only bought back a small part symbolically, and the major shareholder promised not to reduce holdings. But after the stock price rose, they suddenly reduced over a hundred million shares at a discount. Is this just an opportunity for the major shareholder to cash out huge profits?”

Ji Mian News observed that such sentiments are not isolated; on stock forums and interactive platforms, voices questioning Nanshan Aluminum and its controlling shareholder are loud and persistent.

Source: Shanghai Stock Exchange

Company’s Exclusive Response: Not a Binding Commitment

On March 20, facing mounting public doubts, Ji Mian News contacted Nanshan Aluminum’s securities department. A relevant official responded to market concerns.

First, why was the major shareholder’s reduction not disclosed in advance?

The securities department official explained that this reduction did not require prior disclosure. “We had already communicated with the exchange. The shares sold were from the 2016 private placement, which under relevant regulations does not require pre-disclosure.”

Ji Mian News noted that, according to the “Interim Measures for the Management of Shareholder Reductions in Listed Companies” issued by the China Securities Regulatory Commission in 2024, shares obtained by a listed company through public issuance to unspecified or specific targets can be “exempted” from the obligation of 15 trading days’ prior disclosure. Article 9 states that “a report and disclosure of reduction plans should be made to the stock exchange 15 trading days before the first sale,” which does not apply here.

Second, why did the major shareholder’s promise not to reduce holdings turn into “flip-flopping”?

The securities department official said that the statement was not a formal promise but was an inquiry at that time with the controlling shareholder, who responded that there was no reduction plan. “We also stated in the announcement that if the controlling shareholder plans to reduce holdings later, we will disclose it promptly.”

Regarding the meaning of “promptly,” the official clarified that it refers to post-disclosure, not pre-disclosure.

Now that the major shareholder’s reduction is a fact, whether it will damage market confidence, the official said, “We’re not sure.”

Third, why is the major shareholder reducing holdings now?

On the reasons for the reduction, the official said, “It’s just a slight adjustment of the equity structure,” and emphasized that the controlling shareholder remains “positive” about the company.

Regarding the simultaneous buyback by the company and large-scale cashing out by the major shareholder, the official stressed, “The buyback is conducted by the listed company, while the reduction is by the controlling shareholder.”

May Constitute Misleading Statements

Market and legal experts offered different interpretations of Nanshan Aluminum’s explanations.

Several industry insiders told Ji Mian News that while the regulation allowing exemption from pre-disclosure for private placements exists, it does not mean that the reduction activity is free of other compliance risks.

“Although the statement ‘no reduction plan in the next 3 months’ may have interpretive space as a legal commitment, from the perspective of information disclosure seriousness, it could indeed mislead investors,” said Huang Xi, a lawyer at Zhonglun Wende (Chengdu). The “Administrative Measures for the Disclosure of Shareholder Reductions in Listed Companies” clearly stipulate that the information disclosure entity must ensure the information is true, accurate, and complete, and must not contain false records or misleading statements. If the company had already intended to reduce holdings at the time of the statement but failed to disclose it, it could constitute misleading disclosure.

“If the reduction itself has compliance basis, then the operation of buyback by the listed company and cashing out by the controlling shareholder—especially under a false ‘commitment’—can severely undermine investor confidence,” said a private equity professional who has closely followed Nanshan Aluminum. Usually, buybacks are seen as management’s belief that the stock is undervalued and a sign of confidence, while reductions by major shareholders are often signals of dissatisfaction with current valuation or a need for liquidity. When both signals appear simultaneously, investors are left confused about whether the company is worth investing in.

It’s worth noting that as of the end of last year’s fourth quarter, Nanshan Aluminum was the second-largest holding of social security funds among listed companies, with over 160 million shares held.

The long-term observer further pointed out that from an industry fundamentals perspective, Nanshan Aluminum’s competitiveness in high-end aluminum processing is unquestioned. However, this reduction incident exposes issues not in fundamentals but in corporate governance and the seriousness of information disclosure. Procedural compliance is the minimum requirement, but listed companies and controlling shareholders should be more responsible for their public statements.

Ji Mian News also noted that the timing of this major shareholder reduction is sensitive, occurring within 15 days before the annual report disclosure (scheduled for March 27), which could attract regulatory attention.