Major shareholders indirectly invest in peer companies Debon Lighting's “missing” potential peer competition

This week, Hengdian Group Debon Lighting Co., Ltd. (hereinafter referred to as Debon Lighting) has completed the subscription. However, as it waited for the listing bell to ring, the reporter received another complaint from the investor Mr. He. Mr. He said that the disclosure of potential peer competition in the Debon Lighting prospectus was omitted. According to Mr. He’s guidelines, the reporter launched an investigation. Hengdian Group Holdings Co., Ltd. is the controlling shareholder of Debon Lighting, holding 64% of the shares before the issue. According to industry and commerce data, Hengdian Group invested RMB 43 million to invest in Shenzhen Tongsheng Venture Capital Enterprise (Limited Partnership) with a shareholding ratio of 33.33%, which is the largest shareholder of the latter. Tongsheng Venture Capital invested in a company called Guangzhou Zhongheng Optoelectronics Technology Co., Ltd. According to the website of Zhongheng Optoelectronics, the company was founded in March 2008. It is a large-scale modern semiconductor high-tech enterprise specializing in LED chip, packaging and lighting application product development, production, sales and service. Xing Industrial Park has more than 2,000 employees. The description of the main business of Zhongheng Optoelectronics Co., Ltd. and the situation of Debon Lighting have the same industry competition. Debon Lighting's prospectus shows that the company is one of the leading suppliers of green lighting products in China, mainly engaged in the research and development, production and sales of green lighting products. The company successfully grasped the transformation opportunity of green lighting products. In 2011, it began to engage in the production and sales of LED lighting products from the focus on energy-saving lamps. From the previous single energy-saving lamps to the current energy-saving lamps, LED bulbs and LED indoor application lamps, Lighting electronic products, outdoor lighting, four categories of green lighting products. In recent years, horizontal competition has been the red line of IPO audits. Hengdian Group itself is mainly engaged in investment management and business operations. It stated in its prospectus that it did not engage in the same or similar business as Debon Lighting and did not compete with Debon Lighting. The controlling shareholder of Hengdian Group and the actual controller of Debon Lighting, the Hengdian Association of Economic Enterprises, issued a Letter of Commitment to Debon Lighting on September 30, 2014. In the letter, Hengdian Association said: First, the company, the company holds more than 51% of other subsidiaries and other companies actually controlled, currently does not directly or indirectly engage in any competition with Debon Lighting's main business. Business activities; 2. The company and the company's current and future subsidiaries will not engage in, participate in, or participate in any of the current and future developments of Debon Lighting, directly or indirectly, in any form within or outside China. The main business carried out constitutes a competitive or potentially competitive business activity; 3. The company, the company's current and future subsidiaries have any business opportunity to engage, participate in or participate in any business that may compete with Debon Lighting's production and operation. The company and its affiliates will give the above business opportunities to Debon Lighting. Although Hengdian Group is the largest shareholder of Shengchuang Ventures, the reporter did not find any introduction to Shenzhen Tongsheng Venture Capital in the Debon Lighting Prospectus, and there is no such thing as Guangzhou Zhongheng Optoelectronics Technology Co., Ltd. Hengdian Group did not invest in Zhongheng Optoelectronics itself, but Tongsheng Ventures invested in Zhongheng Optoelectronics. If Hengdian Group is a financial investment role in Tongsheng Ventures, not a managing partner, then the control of Tongsheng Ventures is weak. If Shengying Ventures has a small proportion of shares in Zhongheng Optoelectronics, it has no control over the company. Therefore, there is a missing omission in the prospectus. Judging by the substance over the form, I believe that there is no horizontal competition between Zhongheng Optoelectronics and Debon Lighting. As for the potential horizontal competition, there is still the need to transfer the investment equity in the same period. An investment banker who did not want to be named said in an interview with the Public Securities and Financial Network reporters. The reporter wrote to Debon Lighting on the disclosure of the missing potential competition in the industry as reflected by Mr. He. As of press time, he did not receive relevant reply.

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