On November 12, Shanghai Dzh Limited's stock price plummeted by 8.1%, hitting an intraday limit-down. The decline followed the company's announcement on November 11 that shareholder Wang Gongwei had filed a lawsuit on October 15, 2025, with the Shanghai Pudong New Area People's Court, seeking to revoke the resolution passed at the company's second extraordinary general meeting in 2025. The court has accepted the case, though no hearing date has been set.
The legal challenge stems from Xiangcai Co.,Ltd.'s proposed merger with Shanghai Dzh Limited through a share swap, accompanied by a fundraising plan. While shareholders approved the merger during a meeting on October 13, Wang Gongwei alleges procedural flaws in the voting process.
Wang contends that the merger constitutes a significant related-party transaction, as Xiangcai Co.,Ltd. and Shanghai Dzh Limited have existing connections. According to Shanghai Dzh Limited's shareholder meeting rules and the Shanghai Stock Exchange listing regulations, transactions exceeding 30 million yuan or 5% of net assets require prior auditing or valuation by qualified securities intermediaries before shareholder approval. Wang claims the company failed to commission such assessments for Xiangcai Co.,Ltd.'s assets or present related reports during the meeting, rendering the resolution invalid.
Shanghai Dzh Limited maintains that all merger procedures comply with regulations and that the shareholder resolution remains legally binding. The company has pledged to address the lawsuit appropriately. Financial advisor Yuekai Securities, legal counsel Beijing Guofeng Law Firm, and meeting witness law firm Grandall Legal Group (Shanghai) have all issued statements affirming the legality of the merger approval process. They argue the transaction doesn't constitute an "asset purchase or sale" requiring Xiangcai Co.,Ltd.'s valuation, with no violations of laws or company bylaws.
Xiangcai Co.,Ltd. reported strong Q3 2025 results, with revenue reaching 655 million yuan (up 43.77% YoY) and net profit hitting 300 million yuan (surge of 315.25%). Cumulative nine-month revenue stood at 1.799 billion yuan (16.15% growth), with 442 million yuan net profit (203.39% increase), already surpassing full-year 2024 figures.
In contrast, Shanghai Dzh Limited remains unprofitable despite improvement. Nine-month revenue grew 8.78% to 564 million yuan, though net losses narrowed by 85.3% to 29.5624 million yuan. While cost-cutting measures show effect, profitability challenges persist.
The merger's prospects now face uncertainty amid the legal dispute. Market observers had viewed the combination as transformative, potentially creating China's second-largest internet brokerage by revenue and profit—following successful precedents like East Money Information's acquisition of Tongxin Securities and Guide Investment's purchase of Maco Securities.
Investors now await judicial and regulatory outcomes to determine whether this "finance meets technology" union will proceed as planned.
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