The board renewal process for Ningbo Xianfeng New Material Co.,Ltd. (SZSE: 300163), which had been delayed for months, officially commenced in July.
Given the relatively dispersed shareholding structure of Xianfeng New Material and its status of having no controlling shareholder or actual controller, this board election is viewed by some investors as a potential window for a change in control of the listed company.
After disclosing the election announcement on July 2nd, Xianfeng New Material received temporary shareholder proposals from Chen Linqing and another shareholder. The former nominated two non-independent directors and one independent director, while the latter nominated one independent director.
According to the company's announcement, the new board of directors will maintain the previous structure of three non-independent directors and two independent directors.
However, on the evening of July 7th, Xianfeng New Material issued an announcement stating that due to insufficient materials submitted by two shareholders, and the relevant parties having not yet supplemented the missing content, the board resolved not to submit the temporary shareholder proposals for consideration at the general meeting. The company stated that its board was unable to provide shareholders with all the information or explanations necessary for them to make a reasonable judgment on the matter.
Chen Linqing's side recently indicated to reporters that there is a divergence of opinion regarding the procedures and material requirements that led to the rejection of the proposal.
It was also exclusively learned that the two non-independent director candidates nominated by Chen Linqing's side are executives of Beijing Orbit Chenguang Technology Co., Ltd., a prominent enterprise in the commercial aerospace sector.
Regarding the dispute, attempts were made to contact Xianfeng New Material for comment via phone and email on July 9th. No response had been received as of the time of publication.
The Core of the Disagreement
The company identified several issues with Chen Linqing's temporary proposal: the nominated director candidates did not provide undergraduate degree certificates and verification reports from the China Higher Education Student Information database; the accounting qualification certificate was not provided; and the independent director candidate, who serves as the executive dean of the Central University of Finance and Economics Greater Bay Area (Huangpu) Research Institute, did not provide written proof of the university's consent for external part-time work.
Chen Linqing's side believes there are many inconsistencies in how both parties view these issues.
First, regarding the candidates' educational qualifications. Chen's side believes they have provided materials matching the highest degree listed in the candidates' resumes. They argue that providing undergraduate credentials is not a mandatory requirement based on their review of the GEM-listed company governance guidelines.
It was noted that while the company's email attachment requested educational background certificates and verification reports, no mandatory requirement for providing undergraduate materials for those with higher degrees was found in other publicly available documents.
Industry sources indicated that there is no uniform standard for director educational material requirements. Generally, proof of the highest degree suffices, though some companies are more cautious and request all educational records starting from undergraduate level.
Second, regarding the accounting qualification proof.
The company's materials state that an independent director candidate nominated as an accounting professional should possess extensive accounting expertise and meet one of several conditions, such as holding a CPA qualification, having a senior professional title or doctorate in accounting/audit/financial management, or having a senior title in economic management with over five years of full-time experience in relevant fields.
Chen's representative stated they provided the independent director candidate's doctoral degree certificate in accounting.
Finally, regarding the lack of university consent for the independent director's external role, the representative argued that the relevant regulations apply to universities directly under the Ministry of Education, and the research institute in question is a cooperative academic unit without administrative status. He stated the nominee does not hold an administrative post at the university, already serves as an independent director for two other listed companies, and those companies did not require such documentation.
The representative expressed that while they understand the company's questions, communication should have been possible to allow for explanation or material supplementation within a reasonable timeframe, which he felt was not provided.
Email correspondence shows that on the morning of July 7th, company staff requested the shareholders to review relevant laws and regulations and comprehensively supplement all required proof documents and materials. The deadline for submission was set for 5:00 PM that same day.
Chen's representative believed the company's request for supplementary materials was unclear and lacked specific guidance. A phone conversation that afternoon involved arguments over the material specifics and the short supplementation window.
The call ended with the representative stating they had reported the matter to regulators. He claimed they attempted to compile additional materials, even those they deemed unnecessary, but discovered the company had already issued its rejection announcement by the evening. He stated they subsequently sent all supplementary materials via email and courier, but the courier packages were refused by the company.
Rationale Behind the Nominations
Chen Linqing significantly increased his holdings in Xianfeng New Material after the company received a preliminary notice of regulatory penalty.
In mid-May 2026, the company received a prior notice of administrative penalty from the Ningbo regulatory bureau for failing to disclose key details related to changes in control between 2018 and 2024. Penalties were proposed for the company and its former actual controller. The final penalty decision was received on July 8th.
According to Chen's representative, Chen believed, based on the disclosed regulatory information, that the company itself did not have particularly severe issues and judged there would be no other latent risks. Having previously researched the sunshade fabric business and followed the company, he saw an opportunity given the lack of a controlling shareholder and dispersed ownership. The goal was to potentially participate in corporate governance by nominating director candidates.
Notably, the two nominated non-independent directors are executives of Orbit Chenguang. Zhang Zheyu is its legal representative and CEO, and Lv Rui is its financial head.
According to the company's official account, Orbit Chenguang focuses on space computing power, is the first incubated industrial project of a Beijing-based space technology research institute, was founded in late 2024, and is a hard-tech company still in the engineering verification stage.
In June 2026, Orbit Chenguang completed a new financing round, its third announced within three months, with investors including BV Baidu Ventures and several institutional funds.
Regarding the rationale for nominating these two executives, Chen's representative stated it stemmed from Chen's interest in the commercial aerospace sector. He met them at a business forum and had in-depth discussions. Chen felt that if he became involved in Xianfeng's governance, his own bandwidth might be insufficient, hence the thought of the previously acquainted individuals. They expressed interest. While commercial aerospace is not directly related to sunshade materials, it wouldn't preclude future integration of capacities or personnel across the two fields, or retaining the original business while introducing new resources.
A person close to Orbit Chenguang corroborated this, stating the nominees have long relevant experience, and while Xianfeng's financials and fundamentals are generally sound, there are corporate governance issues. The nominees are interested in participating, believing the company could develop better with governance optimizations.
This person added that the listed company's material sector is relatively traditional, with a low proportion of R&D personnel and an extremely low percentage holding master's degrees or above. With national encouragement for new quality productive forces, the company's business could see significant technological and product improvements with a more professional team.
Shareholder Objectives and Broader Context
Regarding the shareholder nomination, a seasoned industry analyst noted that Xianfeng's highly dispersed shareholding does create the possibility of shareholders attempting to seek control.
The company's July 7th reply email also requested clarification on any acting-in-concert relationships, asking the shareholder to provide a detailed statement and shareholding details of any concert parties.
Chen's representative stated on July 8th that Chen had provided a declaration to the company stating no such relationships exist. He emphasized that Chen is uncertain about the election outcome but hopes, at minimum, for a normal vote at the meeting. Securing some board seats would be positive, but from an investment perspective, there wouldn't be significant loss otherwise.
A person close to Orbit Chenguang also indicated that Chen's shareholding percentage does not give him the ability to seize control, as he is not even a 5% shareholder. The goal is more for recognition of the nominees' experience and capability by minority investors. If elected, they would engage from a corporate management perspective to help stabilize the main business and improve fundamentals.
Besides his role at Orbit Chenguang, Zhang Zheyu also serves as co-president of another listed company. In late 2025, that company's stock price surged after investing in Orbit Chenguang, riding the "commercial aerospace" concept wave.
Whether internal executives at the fast-developing Orbit Chenguang have the bandwidth to hold multiple external company positions remains an open question. A person close to Zhang Zheyu stated he has assessed his capacity as sufficient, noting that while Orbit Chenguang is growing rapidly, its management team is already established, objectively allowing Zhang to dedicate some thought and coordination to other companies' governance in a director capacity.
Chen's representative added that Zhang Zheyu is indeed a talent in commercial aerospace and an excellent corporate manager. If he can reasonably allocate his efforts to help the listed company solidify its main business and improve fundamentals, it would be beneficial for both the company and shareholders.
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