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Introduction: Beijing Tongmei and Zhang, an employee involved, were exposed by the media to be placed on file for investigation by the public security organ on suspicion of infringing trade secrets, but the company's prospectus did not mention the filing of the case. Although Beijing Tongmei repeatedly stressed that Zhang, an employee involved in the case, had little knowledge and experience and limited contribution to the company, he still implemented equity incentives for the employee who had just graduated and joined the company. Beijing Tongmei's IPO appears to be a spin-off listing, but it is actually a "secondary listing" of the controlling shareholder's main assets in A shares on the eve of the IPO declaration.
Product: research Institute of Sina Finance listed Company
Author: IPO refinancing Group / Zheng Quan
Recently, Haitong Securities was criticized by the Shanghai Stock Exchange, mainly due to the lack of due diligence in the verification of the company's IPO sponsors, the carelessness of due diligence by the core department of quality control in investment banks, and the weak links in the internal quality control of the sponsor business.
Haitong Securities has been punished by the Securities Regulatory Commission and the Stock Exchange for its IPO recommendation business many times in the past year, but the company has failed to make practical corrections. The Shanghai Stock Exchange also requires Haitong Securities to conduct a comprehensive self-examination of the listing sponsor projects and take practical measures to ensure that the rectification is in place.
According to the public information of the three major exchanges in Shanghai, Shenzhen and North China, Haitong Securities is currently reviewing a total of 35 IPO projects (taking acceptance as the standard, excluding registration valid and terminated projects).
Among the 35 projects, Beijing Tongmei Crystal Technology Co., Ltd. (Beijing Tongmei) is Haitong Securities's longest Science and Technology Innovation Board project, which has been waiting for 28 months. Beijing Tongmei IPO jammed or because of being involved in trade secret disputes, the company and its employees were exposed by Shandong government media to be put on file for investigation by public security organs on suspicion of infringing trade secrets. However, the matters of filing and investigation are not mentioned in the prospectus and the reply to the follow-up inquiry letter. Compared with the report letter, Tianyan search information and the company's prospectus, Beijing Tongmei seems to have provided equity incentives for the employees involved in the case.
Is Haitong Securities diligent and responsible without disclosing important filing information?
According to the prospectus, Beijing Tongmei is mainly engaged in indium phosphide substrate, gallium arsenide substrate, germanium substrate, PBN material and so on.WatchfamilyfeudHis research and development, production and sales of high purity materials.
In January 2022, Beijing Tongmei IPO application was accepted. In July 2022, the company's IPO application was approved. In August 2022, Beijing Tongmei submitted an application for registration. 22 months after the registration was submitted, the company has not yet been approved for registration, which is speculated to be related to the company's involvement in trade secret disputes.
According to the Economic Herald of Volkswagen Daily, the organ of the Shandong Provincial CPC Committee, in September 2021, Shandong Guojing New Materials Co., Ltd. (hereinafter referred to as "Shandong Guojing") reported the case at the Yucheng Public Security Bureau on the grounds that Zhang and Beijing Tongmei had infringed trade secrets. On October 13, 2021, the Yucheng Public Security Bureau thought that the case met the conditions for filing the case and carried out investigation.
Interestingly, when Beijing Tongmei submitted its listing application in January 2022, it did not say a word about the trade secret disputes reported by the media and the matters being filed for investigation in the prospectus. Was the media report inaccurate or the company deliberately concealed? Is Haitong Securities fully adjusted?
In response to the inquiry letter from the Shanghai Stock Exchange, Beijing Tongmei and Haitong Securities gave a partial explanation of the trade secret dispute, but did not mention whether it would be put on file for investigation.
After submitting the application for IPO registration, the CSRC issued an inquiry on August 10, 2022, asking Beijing Tongmei to explain the progress of the trade secret dispute, whether Beijing Tongmei and its subsidiaries have been filed by the public security organs, or whether there is the possibility of being filed in the future, whether it constitutes a unit crime, and whether it constitutes an obstacle to this offering and listing.
22 months later, Beijing Tongmei still has not responded to the CSRC's inquiry, and it is still a mystery whether the company has been filed by the public security organs.
According to media reports and information disclosed by Beijing Tongmei, Zhang, an employee involved, joined Guojing in Shandong Province after graduating from university in 2016, where he was responsible for the research and development of pyrolytic boron nitride and pyrolytic graphite, during which he participated in the development of core products and processes such as PBN-PG composite heaters, PBN holding rods and PG coatings. Shandong Guojing said it was in a leading position in the above products and ranked high in China.
Shandong Guojing also said that Zhang joined Tongmei in Beijing in May 2019, was responsible for the development of the above products, and helped Beijing Tongmei to achieve product production and marketing in the short term. The trade secret products allegedly infringed by Zhang and Beijing Tongmei have very good commercial prospects, and secret-related technologies usually take 3-5 years to study, but Beijing Tongmei has only been used for more than 3 months.
In response to questions about the media and reporting letters, Beijing Tongmei said in the second round of inquiries that the company's core technologies are independent research and development, the source is clear, and there is no infringement of intellectual property rights such as trade secrets of the whistleblower, and lists a large number of materials to corroborate the conclusions.
Should there be an equity incentive for employees suspected of infringing trade secrets? Query response to evade key questions
Zhang, a former employee of Shandong Crystal and a current employee of Beijing Tongmei, suspected of infringing its trade secrets, received an equity incentive less than two years after joining Beijing Tongmei, the Economic Herald reported. Zhang holds Beijing Tongmei shareholding platform Boyu Hengye 3Watchfamilyfeud.5714% equity. While Boyu Hengye holds 637050 shares of Tongmei Crystal, Zhang indirectly holds 22800 shares of the company.
The report in the Economic Herald did not disclose who Zhang was. According to the information disclosed in the Beijing Tongmei prospectus, Zhang should be Zhang Jiawei, who works as the head of research and development projects at Beijing Tongmei subsidiary Beijing Boyu (including subsidiary Tianjin Boyu). First, the shareholding ratio of 3.5714% corresponds, second, the name of the holding subsidiary matches, and third, Zhang Jiawei's R & D work in Beijing Tongmei is similar to that of Shandong Guojing.
Through the comparison of public data such as Tianyan investigation and enterprise inspection, we found that Zhang so-and-so should be Zhang Jiawei. Before working for Tongmei in Beijing in May 2019, Shandong Guojing had at least five invention patents including Zhang Jiawei (co-inventor). After Zhang left, there was no employee named Zhang Jiawei among the inventors in Shandong Guojing's invention patent.
It is almost certain that Zhang so-and-so mentioned in media reports and reporting letters should be Zhang Jiawei. Zhang Jiawei Mingming holds a 3.5714% stake in Beijing Tongmei shareholding platform Boyu Hengye, that is, indirectly holding Beijing Tongmei.
However, Beijing Tongmei and Haitong Securities said in an inquiry letter that when the employees joined the company in May 2019, they did not promise any equity or option incentive terms, and they did not grant them AXT shares or options after joining the company.
Beijing Tongmei did not grant shares and options to Zhang Jiawei's controlling shareholder AXT, but gave shares to its own company. Beijing Tongmei deliberately evaded questions from the media and the content of the report letter in its reply to the inquiry letter. Unknown investors who read Beijing Tongmei's reply will mistakenly think that Zhang Jiawei has not been awarded shares, so the letter is misleading to a certain extent.
Did Zhang Jiawei, the employee involved, get stock incentives? what is the impact on Beijing Tongmei? In response to the inquiry, Beijing Tongmei said that Zhang Jiawei, the employee involved, had "relatively shallow knowledge reserves and experience" and "limited R & D contribution to the company's products". "his salary has not been significantly improved after joining the company." In theory, Zhang Jiawei should not get the equity incentive from Beijing Tongmei, which will deepen the doubt about the disclosure of trade secrets.
Since Zhang, who just graduated in 2016, has relatively shallow knowledge reserves and experience, has not brought Shandong Guojing's technology to the company, and has made limited contributions to the research and development of the company's products, why did Beijing Tongmei grant equity incentives to Zhang in 2020? and served as head of R & D projects?
Whether Zhang Jiawei, the employee involved, brought the core trade secrets of Shandong Guojing to Beijing Tongmei, and whether Beijing Tongmei and Zhang Jiawei were put on file for investigation, these mysteries have not been solved for three years, Haitong Securities has not withdrawn the sponsor, and Beijing Tongmei has not withdrawn its IPO application.
Split listing or secondary listing? Haitong Securities is deeply bound to the issuer.
In July 1998, Beijing Tongmei was established. From the beginning of its establishment to December 2020, Beijing Tongmei is only an important business unit of AXT, the controlling shareholder: responsible for the production, research and development of semiconductor substrate materials and domestic sales.
It is worth mentioning that AXT, the controlling shareholder of Beijing Tongmei, has an 85.51 per cent stake and is listed on US stocks. Beijing Tongmei IPO in Science and Technology Innovation Board, constitute a spin-off listing.
In fact, Beijing Tongmei IPO is not only a spin-off listing, in fact, it is more like a secondary listing of AXT, because on the eve of applying for IPO, AXT's Bo Yu Department (responsible for PBN product business), Jinmei Department (high purity metal compounds), American Tongmei (overseas sales business of semiconductor substrate materials) from AXT Holdings to Beijing Tongmei Control.
In December 2020, AXT and related shareholders increased capital to Beijing Tongmei with 100% equity of Beijing Boyu, Baoding Tongmei, Chaoyang Tongmei, Nanjing Jinmei and Chaoyang Jinmei. After the completion of the capital increase, the above-mentioned entities became wholly-owned subsidiaries of the issuer.
In other words, after AXT moves its assets internally, it will be listed in Science and Technology Innovation Board with Beijing Tongmei as the main body. After the completion of the restructuring, AXT had no actual business and had only three staff members. As of May 16, the main asset is Beijing Tongmei's AXT with a market capitalization of about $150 million, or about 1.1 billion yuan.
This IPO, Beijing Tongmei plans to raise 1.167 billion yuan, which is comparable to the current market value of the parent company. The number of shares in Beijing Tongmei's public offering does not exceed 9. 9 percent.Watchfamilyfeud, 8.39 million shares, accounting for not less than 10% of the company's total share capital after issuance. Simple calculation, Beijing Tongmei's IPO estimate can be as high as 11.67 billion yuan.
Data show that Haitong Innovation, Haitong New Kinetics and Haitong New Energy own 1.4859%, 1.3373% and 0.5201% of Beijing Tongmei respectively, with a combined stake of 3.3433%.
The fund managers of Haitong New Kinetic Energy and Haitong New Energy, and the executive partners of Haitong New Energy are Haitong New Energy Private Equity Management Co., Ltd. Haitong Innovation holds 29.9% of Haitong New Energy, and Haitong Kaiyuan Investment Co., Ltd. holds 20% and 19.33% of Haitong New Energy and Haitong New Kinetic Energy respectively. The indirect controlling shareholders of Haitong New Energy Private Equity Investment Management Co., Ltd., Haitong Kaiyuan Investment Co., Ltd. and Haitong Innovation controlling shareholders are Haitong Securities.
Will the deep binding of the equity relationship between Haitong Securities and Beijing Tongmei affect the independence of its sponsor business? When Beijing Tongmei was reported by the state media and put on file for investigation, did Haitong Securities fully adjust and assist in concealment? It all takes time to give the answer.
