Focus Media uses backdoor to return to regenerate minor issues. Small shareholders say they will sue for damage to their interests

Ji Hairong, vice president of Focus Media, previously stated that Focus Media's current A-share listing has been completed and this matter will not have any adverse impact on new listed companies.

Focus Media's "backdoor" to Qixi Holdings can be described as full of twists and turns. However, just as its backdoor reorganization plan was just approved by the China Securities Regulatory Commission, Beijing CCTV 3D Advertising Co., Ltd.(hereinafter referred to as "CCTV 3D"), indirectly held by Focus Media, suddenly appeared halfway, allowing this annual backdoor drama to be reborn.

At a time when Focus Media is almost certain to become the first listed company to delist from U.S. stocks and then register in A shares, Wang Yongmei, former chairman and current shareholder of Focus Media's minority shareholder CCTV 3D, recently added an "administrative review" to the China Securities Regulatory Commission. Materials, requiring the revocation of the administrative license approved by the China Securities Regulatory Commission to approve Focus Media's "backdoor" borrowing. Wang Yongmei also told a reporter from Securities Daily that she would tell Focus Media to the end.

The relevant person in charge of Focus Media responded in an interview with reporters that the company will not comment on the incident for the time being. The company has announced the relevant content, and the specific details will be disclosed after the year.

Minority shareholders claimed that the interests of China Stock Exchange had been damaged

and the case of Focus Media's Qixi Holdings, which used a backdoor approach to return to A shares, attracted much attention from the market due to the huge scale of the transaction. This backdoor comeback drama also continued from 2015 to 2016.

At the end of last year, Qixi Holdings issued an announcement stating that Focus Media's backdoor reorganization plan had been approved by the China Securities Regulatory Commission. Originally, this reorganization could have come to a perfect end, but Wang Yongmei, the current shareholder of CCTV 3D, indirectly held by Focus Media, once again voted with her foot, making the reorganization controversial.

In December 2015, Wang Yongmei filed an "administrative review" with the China Securities Regulatory Commission, requesting the Securities Regulatory Commission to revoke the above documents, that is, revoke the approval of Focus Media's "backdoor" matter. The China Securities Regulatory Commission issued relevant documents and finally approved Focus Media's "backdoor" to Qixi shares. Recently, Wang Yongmei submitted "supplementary materials" at the request of China Securities Regulatory Commission. In response, some industry lawyers said that this may be the first case in China to file administrative review on the "backdoor reorganization" of a listed company.

Wang Yongmei believes that the transfer of trademark rights by CCTV 3D was carried out by malicious collusion of relevant parties to transfer the registered trademark under CCTV 3D's name for free through related transactions, which harmed her legitimate interests. In essence, Focus Media was hollowing out CCTV 3D's business and assets. According to the provisions of the Contract Law, contracts that collude maliciously and harm the interests of the state, collective or third parties are invalid. The transfer process of CCTV's 3D trademark rights is not legal and compliant.

It is understood that Wang Yongmei is one of the founders of CCTV 3D Company, which owns many well-known registered trademarks. In the second year after Focus Media was listed on NASDAQ in the United States, Focus Media acquired a 70% stake in CCTV 3D through its related parties. Wang Yongmei's personal shareholding ratio was diluted to 10%, and she gradually withdrew from CCTV 3D's management.

Wang Yongmei's authorized representative said that in recent years, Wang Yongmei has not directly participated in CCTV 3D's decision-making, personnel, finance, etc. Last year, she began to formally intervene in the incident after Focus Media's proposed backdoor borrowing of Jiangsu Hongda. In June 2015, Focus Media planned to shell Jiangsu Hongda. Relevant public documents disclosed that CCTV 3D transferred the three registered trademark rights it held to Focus Media's subsidiary Focus Jingshi.

Focus said it would not affect the normal work of the company.

According to Focus Media, Wang Yongmei repeatedly reported to the CSRC during Focus Media's return to A-shares. During the review process, the Listing Department and the Reorganization Committee of the CSRC repeatedly requested the company to conduct self-examination on this matter and required brokerages and lawyers to verify it. Recently, in an interview with reporters, Focus Media did not respond too much to this matter, only saying: "Please pay attention to subsequent company announcements." However, Ji Hairong, vice president of Focus Media, previously stated that Focus Media's A-share listing work has been completed and this matter will not have any adverse impact on new listed companies.

At present, Wang Yongmei filed a lawsuit with the People's Court of Chaoyang District of Beijing City, using CCTV 3D and Focus Crystal as defendants, and Qixi Holdings as the third person, requesting confirmation that CCTV 3D's transfer of registered trademarks to Focus Crystal was invalid. The Chaoyang District Court accepted the case on October 29, 2015, and has not yet issued a first-instance judgment.

Wang Yongmei also said in an interview with reporters,"Within two months, the CSRC will issue a result of the reconsideration. If the reconsideration is not passed, I will continue to file a lawsuit with the court and will sue Focus Media to the end."

Insiders believe that: "With the encouragement of domestic regulators for the listing of emerging industry companies and investors 'favor for the media industry, the return of A-shares, refinancing, mergers and acquisitions, etc. frequently occur." However, the operating process of privatizing and dismantling the VIE structure of China Stock Company is extremely complex and involves coordination of multiple interests, and there are many uncertainties and risks. Enterprises need to comply legally and legally during the implementation process, handle the relationship with minority shareholders well, and protect the interests of minority shareholders."

Editor: yvonne