Suspected of major financial fraud! Orient Group Incorporation (600811.SH) is now at risk of delisting. How will the interests of 129,000 shareholders be guaranteed?

After 8 months of investigation, Orient Group Incorporation (600811.SH), which was deeply involved in a whirlpool, has finally made progress in the case. The China Securities Regulatory Commission (CSRC) has preliminarily found that Orient Group Incorporation is suspected of significant financial fraud, and this behavior may trigger a situation where the company is forced to delist. As of September 30, 2024, Orient Group Incorporation had a shareholder base of 129,000. With the revelation of the significant financial fraud, how to protect the legitimate rights and interests of shareholders has become a concern. Dong Fei, a lawyer from Beijing Guoshun Law Firm, told Caixin reporters, "Even if a listed company is eventually delisted due to significant violations, as long as it is still operating normally, shareholders can seek compensation through legal means to protect their legitimate rights." Significant Financial Fraud Exposed at Orient Group Incorporation Yesterday evening, the CSRC reported that on June 20, 2024, the CSRC launched an investigation into Orient Group Incorporation. It has been preliminarily found that the financial information disclosed by Orient Group Incorporation from 2020 to 2023 is seriously untrue, suspected of significant financial fraud, and may trigger a situation where the company is forced to delist. The case is currently under investigation, and the CSRC will promptly investigate the facts of the violations and handle them seriously according to the law. According to the financial reports previously disclosed by Orient Group Incorporation, the company's revenue exceeded 10 billion for 3 consecutive years from 2020 to 2023, with a profit in 2020 but losses in the following 3 years. In 2020, the company's operating income was 14.711 billion yuan, a year-on-year increase of 11.63%, achieving a net profit of 240 million yuan, a year-on-year decrease of 58.8%; in 2021, the company's operating income was 13.729 billion yuan, a year-on-year decrease of 6.68%, with a net loss of 1.719 billion yuan, a year-on-year decrease of 814.81%; in 2022, the company's operating income was 11.265 billion yuan, a year-on-year decrease of 17.94%, with a net loss of 996 million yuan; in 2023, the company's operating income was 6.081 billion yuan, a year-on-year decrease of 46.02%, with a net loss of 1.557 billion yuan. The "crisis" of Orient Group Incorporation broke out on June 18, 2024, when the company suddenly announced that due to the tightening liquidity of its related party, Orient Group Incorporation Financial Limited Company, the company and its subsidiaries were restricted from withdrawing 1.64 billion yuan of deposits from this financial company. This news quickly caused a market shock, heralding the beginning of Orient Group Incorporation's crisis. After the financial crisis broke out, in order to pacify the market and investors, the actual controller of the company quickly issued a "Commitment Letter on Resolving Risks Related to the Financial Company", in which Orient Group Incorporation Limited, as the controlling shareholder of Orient Group Incorporation Financial Limited Company, and its actual controller Zhang Hongwei promised to support the financial company in resolving liquidity shortages through measures including but not limited to asset disposal. They guaranteed the security and liquidity of the company's deposits in the financial company. Orient Group Incorporation Limited and the actual controller expect these commitments to be fulfilled within the next 3-6 months. However, after 6 months, the promise made by the actual controller Zhang Hongwei became a "bubble". Behind the financial fraud, the pressure on Orient Group Incorporation's funds has become increasingly evident. On February 14, 2025, Orient Group Incorporation disclosed an announcement about being unable to repay the raised funds on time. On March 6, 2024, the company used 629 million yuan of idle raised funds to temporarily supplement working capital. Due to the tight liquidity of the company, the company expects that it will be unable to repay the raised funds to the dedicated account on time. Lawyer: 129,000 shareholders can exercise their rights normally As of the end of the third quarter of 2024, Orient Group Incorporation still had 129,000 shareholders. After the preliminary findings of the company's involvement in financial fraud, how investors can protect their legitimate rights and interests has become a matter of concern. Caixin reporters found on stock market platforms such as stock bars that many investors have expressed their opinions: "What should investors do, is there any compensation for delisting?" "Retail investors are paying a painful price"... These statements are filled with anxiety and worry. According to the Securities Law and relevant laws and regulations, listed companies have an obligation to disclose financial information truthfully, accurately, and completely to protect investors' right to information. If shareholders' rights are damaged due to financial fraud by the company, shareholders have the right to defend their rights through legal means. In such cases, shareholders can file civil lawsuits with the court to seek compensation from the company and related responsible individuals for the investment losses caused by financial fraud. Dong Fei, a lawyer from Beijing Guoshun Law Firm, told Caixin reporters, "Even if a listed company is finally delisted due to significant violations, as long as it is still operating normally, shareholders can seek compensation through legal means to help them fight for their legitimate rights." Regarding the scope of compensation, Dong Fei further pointed out, "The compensation period has a start and end date, and since Orient Group Incorporation has been involved in financial fraud since 2020, the compensation period will start from the 2020 financial report.On the day of publication, there were already false statements involved, and investors who bought in afterward can make claims, but it should be noted that if there were suspicions of financial fraud in the 2020 semi-annual report, the timing might be moved up to the date of the 2020 semi-annual report. As for the deadline, it may need to be ultimately determined by the court. One possible timing point could be the date when the Securities Regulatory Commission filed a case, and another could be the date of disclosure when financial company large deposits withdrawals were restricted. However, the specific timing of the final point will still need to be determined by the penalties imposed by the Securities Regulatory Commission.According to statistics, in 2024, the China Securities Regulatory Commission (CSRC) handled a total of 135 cases of illegal information disclosure, including financial fraud, an increase of 17% year-on-year. This number ranked first among all types of cases. The CSRC has repeatedly emphasized the need to strengthen the crackdown on fraudulent issuance, financial fraud, and other illegal activities that are most concerning, most detested, and "most intolerable" to investors. It is worth mentioning that Orient Group Incorporation released a notice yesterday regarding the progress of the investigation and risk alert, stating that as of the date of the announcement, the investigation by the CSRC is still ongoing and the company has not yet received a conclusive opinion or decision on the mentioned investigation. During the investigation, the company will actively cooperate with the CSRC's relevant investigation work. This article was reprinted from "Cai Lian She". GMTEight editor: Song Zhiying.