Fucheng Co., Ltd.: Due to the violation of disclosure regulations involving a 38.7 million yuan equity transfer and a 107 million yuan related-party transaction, the company and two senior executives have been issued warning letters.

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On March 20, Hebei Fucheng Wufeng Food Co., Ltd. (600965.SH, Fucheng Shares) announced that it received an “Administrative Supervision Measures Decision” from the Hebei Regulatory Bureau of the China Securities Regulatory Commission.

According to the announcement, the company received the “Administrative Supervision Measures Decision” No. [2026] 7 from the Hebei Regulatory Bureau of the China Securities Regulatory Commission (hereinafter referred to as “CSRC Hebei Regulatory Bureau”).

The “Administrative Supervision Measures Decision” disclosed that the company mainly has the following illegal and irregular behaviors:

First, the company failed to fully disclose related parties and related transactions in its 2024 annual report.

Shanghai Fukenglong Enterprise Management Center (referred to as Fukenglong), controlled by the company’s actual controller Li Gaosheng, was not disclosed as a related party in the 2024 annual report, nor was the 38.7 million yuan equity transfer transaction between the company’s investment in Hehui Fund and Fukenglong disclosed.

Second, some related transactions did not timely follow the review procedures and were not disclosed in a timely manner.

In 2024, the company signed agreements for the purchase and sale of cattle and subleasing land with 10 cooperatives controlled by its actual controller Li Fucheng, with a cumulative related transaction amount of 107 million yuan, exceeding 5% of the company’s latest audited net assets. The company did not timely submit the matter for shareholder meeting review. After the relevant transactions were completed, the company held a supplementary review at the shareholder meeting no later than April 11, 2025, and made a supplementary disclosure on April 12, 2025.

The CSRC Hebei Regulatory Bureau stated that the company’s above behaviors violated Article 3, Paragraph 1, and Article 41 of the “Administrative Measures for Information Disclosure of Listed Companies” (CSRC Order No. 182). Chairman and General Manager Li Liang and Secretary of the Board Li Wei failed to perform their duties diligently, violating Article 4 of the “Administrative Measures for Information Disclosure of Listed Companies” (CSRC Order No. 182). According to Article 52 of the “Administrative Measures for Information Disclosure of Listed Companies” (CSRC Order No. 182), the CSRC Hebei Regulatory Bureau decided to issue a warning letter to the company and Li Liang, Li Wei, and record this administrative supervision measure in the integrity files of the securities and futures market.

It is worth mentioning that Fucheng Shares had previously received two warning letters from the regulatory authorities in 2025.

On April 18, 2025, Fucheng Shares announced that it received the “Decision on Administrative Supervision Measures of Issuing a Warning Letter to Li Liang and Li Wei” and the “Decision on Administrative Supervision Measures of Issuing a Warning Letter to Hebei Fucheng Wufeng Food Co., Ltd.” from the Hebei Regulatory Bureau. The announcement pointed out that the company disclosed in Section 4 “Related Situations of Internal Control Audit Report” of the “2024 Annual Report” published on March 22, 2025, that the opinion type of the internal control audit report was “standard unqualified opinion,” which was inconsistent with the “unqualified opinion with emphasis of matter” type disclosed in the internal control audit report announced by the company on the same day. On April 11, 2025, the company disclosed an announcement correcting the “2024 Annual Report,” changing the opinion type of the internal control audit report to “unqualified opinion with emphasis of matter.”

The regulatory authorities believe that Fucheng Shares’ above behaviors violate the provisions of the “Administrative Measures for Information Disclosure of Listed Companies.” The then Chairman and General Manager Li Liang and Secretary of the Board Li Wei violated the provisions of Article 4 of the “Measures” and failed to perform their duties diligently, bearing primary responsibility for the company’s aforementioned violations. According to relevant regulations, the Hebei Regulatory Bureau decided to take administrative supervision measures to issue a warning letter to the company and the responsible parties.

In June 2025, the Hebei Regulatory Bureau announced the decision to order Li Yongxing to rectify and issue a warning letter.

From the reasons, Li Yongxing established Fucheng Industrial (Hainan) Co., Ltd. in 2022 to engage in beef slaughter and processing business, which constitutes a competitive business with the listed company Fucheng Shares, violating the commitment made by Li Yongxing during the initial public offering not to invest in companies, enterprises, or other institutions that are the same, similar, or in any way competitive with the company.

At that time, the Hebei Regulatory Bureau took administrative supervision measures to order Li Yongxing to rectify and issued a warning letter, ordering Li Yongxing to resolve the competition issue between Fucheng Industrial and the listed company as soon as possible and to submit a rectification report to the bureau by June 30, 2025.

Data shows that Fucheng Shares’ main business includes ecological agriculture, livestock industry - beef cattle breeding, food processing, catering services, and funeral services, forming a dual-drive business model of “food consumption + funeral services.” This specifically includes agricultural crop planting, beef cattle breeding, food processing (prepared dishes), catering services, and dietary consumption industries, as well as cemetery development, sales, and cemetery service.

Fucheng Shares’ third quarterly report for 2025 shows that the company’s operating income for the first three quarters of last year was approximately 788 million yuan, an increase of 11.36% year-on-year; total profit was approximately 67.08 million yuan, an increase of 65.53% year-on-year; and net profit attributable to shareholders of the listed company was approximately 53.78 million yuan, an increase of 85.87% year-on-year.

The Paper journalist Li Xiaoqing

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