On October 31, 2025, Qingdao Zhongzi Zhongcheng Group Co., Ltd. (referred to as *ST Zhongcheng, stock code: 300208, 400279) announced that it and related parties received a penalty decision from the China Securities Regulatory Commission (CSRC).
The CSRC investigation revealed the following violations by Qingdao Zhongzi Zhongcheng and its personnel:
1. **False Financial Disclosures (2017–2022 Annual Reports):** - From 2017 to 2021, the company misrepresented financial data related to its Philippines wind-solar hybrid project. Specifically, it falsely recognized revenue and profits for wind projects that did not meet revenue recognition criteria and inflated progress reports for solar projects to prematurely book revenue and profits. - From 2020 to 2022, the company overstated financial data tied to Indonesian mining rights. Notably, the CIS coal mining license was revoked by 2020, and the JAYA manganese mining rights expired in June 2021. Despite this, the company failed to write off these assets and continued listing them as intangible assets. - **Impact:** - **2017:** Overstated revenue by ¥1.403 billion (92.18% of reported revenue) and profits by ¥552.77 million (136.17%). - **2018:** Overstated revenue by ¥467.89 million (36.00%) and profits by ¥217.76 million (94.92%). - **2019:** Understated revenue by ¥672.44 million (88.83%) and profits by ¥285.38 million (78.36%). - **2020:** Overstated intangible assets by ¥300.23 million (6.53% of total assets) and understated revenue by ¥343.08 million (118.51%). - **2021–2022:** Continued overstatement of intangible assets (¥309.70 million annually, ~7.4% of total assets).
2. **Failure to Disclose Major Litigation:** - On May 3, 2023, the company’s Indonesian subsidiary, PT. Transon Bumindo Resources (TBR), received a lawsuit summons from PT. PAM Mineral, involving ¥626.59 million (57.47% of 2022 audited net assets). The company only disclosed this litigation on November 6, 2023.
On April 29, 2024, the company corrected prior accounting errors and asset write-offs related to the mining rights.
**CSRC Penalty:** Qingdao Zhongzi Zhongcheng and responsible individuals were ordered to rectify violations, given warnings, and fined.
**Legal Recourse for Investors:** Under China’s *Civil Code*, *Securities Law*, and judicial interpretations on misrepresentation claims, affected investors may seek compensation for losses (including price differentials, commissions, stamp duties, and interest).
**Eligibility for Claims:** Investors who purchased *ST Zhongcheng securities between April 25, 2018, and April 28, 2024, and sold or held them after April 29, 2024, may register claims.
**Required Documentation:** 1. Copy of ID. 2. Securities account confirmation (stamped by brokerage). 3. Trading records from first purchase to present (stamped by brokerage).
**Note:** - Final claim conditions depend on CSRC penalties and court rulings. - Direct lawsuits without CSRC penalties carry higher risks. - Delisting or bankruptcy may affect litigation timelines but not eligibility.
(Prepared by Shanghai Hanlian Law Firm’s attorney Song Yixin, specializing in securities litigation since 1992.)
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