The chairwoman of Chinese medical aesthetics player Bloomage Biotech Corp., Ltd (SHA: 688363), Ms. Zhao Yan, is facing an investigation from stock exchange authorities following whistleblower accusations that she pressured employees into selling their shares in the company at a discount. The China Securities Regulatory Commission (CSRC) and Shandong Securities Regulatory Bureau are reportedly investigating the case.
Allegations and Investigation
Whistleblowing employees have accused Zhao Yan of ordering them to sell RMB 880 million (USD 121.3 million) worth of shares back to her for a mere RMB 200 million (USD 27.5 million). Documents allegedly show that in July 2020, Zhao Yan asked long-time employees who held shares to transfer them back to her at a price of RMB 90 (USD 12.41) per share. She publicly stated that employees who transferred shares at the discounted price could continue working for the company, while those who refused would be required to leave once the embargo on employees selling shares expired.
Share Sales and Financial Impact
In September 2020, some employees sold their shares to Beijing Honghuixiang Investment Consulting Co., Ltd, controlled by Zhao Yan, at a price of RMB 90 (USD 12.41) per share. This transaction amounted to an RMB 800 million (USD 110.3 million) realization based on the price of RMB 160 (USD 22.06) per share on the day the employee share embargo expired, resulting in a price difference of RMB 680 million (USD 93.75 million). In addition to the share sales issues, other former employees have claimed that they failed to receive a share of company profits as dividends from their holdings.
Company Financials
Bloomage Bio had a market cap of RMB 150 billion (USD 20.6 billion) during H2 2021. During the first three quarters of 2022, the firm, which markets hyaluronic acid among other aesthetic products, generated RMB 4.32 billion (USD 595 million) in sales and RMB 677 million (USD 91.9 million) in net profits, up 43.43% and 21.99% year-on-year respectively.-Fineline Info & Tech
