ST Dongyang (002086.SZ): With the vote imminent, is the hidden agenda "a pie" or "a pitfall"?

Translator: ST Oriental's first ad hoc shareholders' meeting of the year will be held on May 15th to vote on five proposals, including amending the company's articles of association. As the voting approaches, discussions on setting up protection thresholds by the board, modifying the voting and vote counting methods, and adding special provisions to prevent "barbarians" from entering have heated up online. Today, a detailed comparison table of the modified articles of association reveals new discoveries about the inserted provisions, which pose deep implications. Is the inserted provision a "pie" or a "trap"? Comparison: - Source: CSRC Announcement No. 62 of 2023 "Listed Company Articles of Association Guidelines" - Source: www.gov.cn webpage "Company Law of the People's Republic of China" - Source: East Money Information official website, Oriental Ocean Company announcement 1. Is the reorganized Oriental a state-owned enterprise or a private enterprise? Prior to the restructuring, Oriental Ocean was a star of Yantai's private listed companies with a brilliant history. Since 2018, it has been deeply mired in operational difficulties. In December 2023, WKM Gold Union, together with Shenzhen Qianhai Guoyuan and local governments, completed the reorganization. WKM Gold Union became the largest shareholder after the restructuring, with a clear amount of investment, but the exact proportion of state-owned assets cannot be accurately determined. As a fund manager, state-owned assets for investment purposes account for a small portion. The second largest shareholder is Shenzhen Qianhai Guoyuan, a private fund management company, and the third largest shareholder is Hunan Youhe, a private capital entity. Apart from WKM Gold Union's direct investment, state-owned assets include Shandong Hi-speed and the converted shares of the original creditor banks. The total holding of state-owned assets is estimated to be less than 15% of the company's shares. After the restructuring, Oriental Ocean has become a public company primarily owned by private capital. Therefore, whether the amendments to the articles of association and the added provisions are truly appropriate and worthy of deep consideration. 2. Who has the final say in company decisions, trust responsibilities, and to whom can they be entrusted? The dust has not settled on the management restructuring, and ongoing adjustments to the company's board and management team are yet to be finalised. Along with the annual report, the urgency and importance of the host to convene the ad hoc shareholders' meeting to modify the company's articles of association are apparent. Implementing party committee leadership on private enterprises as seen in state-owned enterprises is one effective means of fulfilling responsibilities and taking positive action. Using compliance with the requirements of the Company Law and the Listed Company Articles of Association Guidelines as a reason to incorporate restrictive provisions raises the question of the true intentions behind it. In today's market economy, consideration should be given to the legality, feasibility, and independence of proposals. While it is understandable that central SOEs like WKM are leading in strengthening risk control, the absence of details on party committee decision-making rules and related institutional arrangements in the company's governance structure raises questions about the corresponding adjustments to the governance and management structure of the company. Whether such provisions, with a beginning but no end, will become a talisman for local elders, a safe haven, or a golden hoop that drives away external "barbarians" is a critical question. Is it a "pie" or a "trap," causing people to ponder how to vote on such proposals. Who has the final say in company decisions, who can be trusted, and who can be entrusted to whom? 3. The road to rebirth is long and arduous In a market economy, honesty is paramount. In the face of adversity, Oriental Ocean's integrity has already collapsed, and the road to rebuilding it is long and arduous. The recovery of business operations will take time, and the hearts of small and medium investors need protection. Grasping the pie, avoiding the trap, respecting oneself, and casting a solemn vote are essential. Just as moss flowers are small like rice grains, even they learn to bloom like peonies.