Internal Meeting Speech by Chairman Xiangshuang Shan on December 15
I believe we have all seen the announcement about delisting of the company by NEEQ. Previously we have thought about and prepared for this situation, tonight’s announcement still caught us unaware. I was still communicating with NEEQ this very morning about our change and reform as requested.
Regulatory policies on private equity investment have had substantial changes since last May. We followed new requirements and did a great deal of work to protect the interests of investors to smooth the development of the company. We made every effort to meet the requirements set forth by NEEQ, and strived to remain listed in the New Board.
As a comprehensive investment group, private equity fund management is only one part of thecompany. After the private placement of the company, the proportion of direct investment rose sharply and direct investment income also increased tremendously resulting our private equity management fee and carried interest income to become less than 80% of total revenue. As the main body of the listing, the company alone manages more than 60 funds, and according to the limited partnership agreement, any changes of General Partner need unanimous approval of all limited partners. The company could not liquidate the funds nor change the General Partner of these funds in such a short period of time. The group was unable to cancel fund manager qualification (or change the revenue structure), and ultimately did not meet the new change and reform requirement by NEEQ.
Today, NEEQ announced that we are not in compliance with the new requirements and issued a notice of delisting. No matter what, we will work together with the host broker to properly handle the follow-up issues after the delisting, especially the protection of the rights and interests of small and medium investors.
I am fully aware of the workload for CSC Group. As a large-scale comprehensive equity investment organization that has gone through 17 years of hardships to change, it will take a large amount of work and pressure to complete the change and reform within a short period of time. Here, I would like to give special thanks to my colleagues who fought in the front line during the past year.
We landed in the New Board in 2015, and made another huge leap in the company's history. As market conditions and regulatory policies change, being unable to comply with these new changes and reform requirements resulted in delisting made CSC Group suffer a setback. On our path to success, this setback is not the first, and it will not be the last.
In the past 17 years, business cycles, market cycles, industry cycles and policy cycles, large or small, have caused short-term setbacks to CSC Group. However, after each setback, CSC Group has flown even higher. Because we have a professional team, who have been tested by waves of typhoons, has thrived in these harsh conditions. We are keenly aware of the market opportunities and the success we can achieve, because we are all in a great time. We uphold the mission ‘to serve the state strategy, to serve area economic development, and to serve industry development’. We will follow the trend of China's economy and society closely, which inevitably will broaden and further our path in future.
Looking at the past five years, the path to the capital market we designed, we had originally planned to be listed in Hong Kong in 2013. However, the New Board became a promising land of the multi-level capital market system. We actively responded to the call for development of the New Board, and in 2015 we successfully listed ourselves. Now that the environment has changed, we are going to be delisted, which is indeed a considerable setback for CSC Group. However, we have already started to work on other capital markets and this loss may be a blessing in disguise.
Dear Colleagues, CSC Group, like a high-speed train, has been on its way for 17 years. Over the past 17 years, the train has been loaded with the trust and expectations from more than 2,700 shareholders and partners, as well as our original values and dreams. Nothing has changed. Venture capital business, industrial transformation, operational improvements, and international investment business are all still developing and performing strongly. We will certainly achieve new success and glory and have the confidence in turning pressure into motivation, and setbacks into opportunities. CSC Group will usher in a new era of innovation and development, and create great value for our shareholders and partners.
At present, the management team of the company, both within headquarters and the various branches, shall conduct a plan made by the company and make positive efforts to cope with the aftermath of delisting, especially the communication and explanation to our shareholders and partners. All of us must face the challenge together.
I would like to share with you that I once said at the company annual meeting: The onus is on ourselves and never blame others. There's more to the picture than meets the eye. To be a sun, to be a ray of sunlight, Let us grow and prosper together.
PS:1、NEEQ = National Equities Exchange and Quotations, started since January, 2013, is a new stock exchange in Beijing, often referred as the New Board, which is after the main board of Shanghai and Shenzhen stock exchange.
2、 company=CSC Group succeeded in private placement of RMB¥ 8.5 bn (approx. US$1.28 bn) in April 2015
3、Partner= In China, General Partner is usually the same entity as the Manager.