Giant Network Group (002558.SZ) received a regulatory letter due to the disclosure of historical asset sales.

On April 30th, Giant Network Group (002558.SZ) received an administrative supervision decision from the Chongqing Securities Regulatory Bureau regarding a historical equity transfer transaction in 2020. The Chongqing Securities Regulatory Bureau has issued a warning letter to the company and related personnel as part of the administrative supervision measures, and has requested the company to further strengthen legal compliance learning and internal control management. This matter does not involve any administrative penalties and does not affect the company's current operations. The related transaction took place in September 2020, when a wholly-owned subsidiary of Giant Network Group transferred 100% equity of Hefei Lingxi to Shanghai Zhuoxian. According to the company's historical announcements, this sale was part of the company's strategic reform and focus on core areas since 2019. The chess game network games operated by Hefei Lingxi were relatively weakly related to the company's core business areas, and therefore were included in the asset disposal scope. This transaction was beneficial for the company to optimize resource allocation and focus on core business activities. The selling price of this transaction was higher than the initial investment cost, protecting the interests of the company's shareholders, especially small and medium-sized shareholders. After the equity transfer agreement was signed, Shanghai Zhuoxian encountered difficulties in financing payments due to objective factors at the time. The company's management provided personal loans for the benefit of the listed company. This loan was not directly or indirectly provided by the listed company. The regulatory authorities identified Shanghai Zhuoxian as a party that helped facilitate the transaction, as the funds for the equity transfer came from a related party of Giant Network Group. Therefore, it was considered a related party transaction. The regulatory authorities emphasized that Giant Network Group had not followed the required procedures for related party transactions and information disclosure at the time of the transaction. The Chongqing Securities Regulatory Bureau believes that this matter violated relevant provisions of the "Regulations on the Management of Information Disclosure of Listed Companies," and has issued a warning letter to the company and related personnel as part of the administrative supervision measures. This measure is not an administrative penalty, but a reminder and encouragement to comply with regulations. The Chongqing Securities Regulatory Bureau has requested the company to learn from this incident, strengthen legal compliance learning, improve information disclosure management and internal control mechanisms, and further enhance operational compliance levels. Giant Network Group's General Manager, Liu Wei, stated in a video link interview, "This incident exposed our insufficient understanding and learning of relevant regulations at the time, resulting in errors in procedures and disclosure work. The company and management attach great importance to this issue, accept regulatory advice sincerely, and will further strengthen legal compliance learning, improve information disclosure management and internal control mechanisms, and continuously enhance operational compliance." Giant Network Group also mentioned in the announcement that this matter does not affect the company's normal production, operation, and management activities.