This year, multiple risks have surfaced together for Suzhou Jinhongshun Auto Parts Co.,Ltd. (formerly known as ST Jin Hongshun), including involvement in commercial disputes that led to the freezing of its bank accounts by judicial order, an investigation by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure rules, multiple rounds of precautionary freezes on the controlling shareholder's shares, and unresolved non-operational fund occupation by the actual controller.
Why has this auto parts listed company sunk so deep into trouble? From a surface level, the reasons appear to be a combination of fund occupation, litigation entanglements, share freezes, and information disclosure violations. However, at a deeper level, this is the inevitable outcome of long-term internal control weakness, the actual controller crossing governance red lines, and a failure of the checks-and-balances mechanism. The case of Suzhou Jinhongshun Auto Parts Co.,Ltd. serves as a stark warning for all A-share listed companies to improve corporate governance and constrain the behavior of actual controllers.
First, listed companies must solidify the responsibilities of key positions to avoid a governance vacuum.
Public announcements show that starting from the end of September 2025, Liu Xu, then the company's chairman, general manager, and actual controller, stopped attending work and missed several important board meetings. In December 2025, a shareholder holding more than 5% of the shares, Good Investment Co., Ltd., proposed removing Liu Xu from his positions as director and from all special committee roles, but this interim proposal was not passed by the shareholders' meeting. In January 2026, the board of directors proposed removing Liu Xu from his roles as chairman and general manager, but retaining his position as a director. In April 2026, the listed company learned that Liu Xu had been listed as a discredited person subject to enforcement (Dishonest Executee), disqualifying him from holding senior management positions. The board again proposed removing him as a director, and the relevant resolution was only passed by the shareholders' meeting in mid-May.
This tortuous personnel process exposed the excessive concentration of power in the actual controller, as well as the failure of the checks-and-balances mechanism between the board of directors and the shareholders' meeting. Given that the actual controller had already illegally encroached on the company's interests and failed to perform his duties normally, the company's compliance risks continued to escalate.
Second, listed companies must adhere to the principle of independent legal person operation, clearly defining the boundary between public and private interests, to prevent actual controllers from harming the company's rights and interests.
The 2025 internal control audit report revealed that actual controller Liu Xu engaged in multiple acts constituting non-operational fund occupation. For example, he carried out supply chain finance business without commercial substance and without internal approval, causing the listed company to assume a 50 million yuan payment obligation. He illegally pledged the subsidiary's licenses, official seals, and chops, leading to the forced transfer of 19,999,900 yuan. A related borrowing dispute made the listed company a co-defendant, resulting in a provision of 37.5 million yuan for estimated liabilities.
These significant internal control deficiencies led the audit firm to issue an adverse opinion on internal control, resulting in the company's shares being placed under Other Risk Warnings. Data shows that as of the end of May 2026, the outstanding balance of fund occupation by the actual controller was still 106 million yuan and remained unpaid. On June 1 of this year, Suzhou Jinhongshun Auto Parts Co.,Ltd. was subjected to an additional Other Risk Warning.
Finally, listed companies must strengthen their information disclosure defenses, implement regular compliance management, and protect investor rights.
On June 26 of this year, Suzhou Jinhongshun Auto Parts Co.,Ltd. received a notice of case filing from the CSRC and was placed under investigation for suspected violations of information disclosure laws and regulations. This highlights the company's obvious shortcomings in information disclosure management and major risk screening mechanisms, and shows that regular compliance governance was not implemented.
The compliance problems arising from governance failures continued to spread, disrupting the company's operations. In July, due to factoring and sales contract disputes involving the actual controller, some of the company's bank account funds were frozen by judicial order. If these disputes are not properly resolved and the company's bank accounts remain frozen, it will further increase operational pressure.
On July 22, Suzhou Jinhongshun Auto Parts Co.,Ltd. completed the election of its fourth board of directors and the adjustment of senior management. However, changing personnel is easy, but reshaping the system is difficult. The new management team must not only deal with thorny issues like the CSRC investigation, legal proceedings, and account freezes, but also must advance the recovery of occupied funds, internal control rebuilding, and the resolution of equity risks.
The case of Suzhou Jinhongshun Auto Parts Co.,Ltd. once again serves as a reminder: only by upholding the bottom line of being an independent legal person, clearly defining the boundaries of public and private rights and responsibilities, and solidifying regular internal control management, can a listed company earn the trust of its vast investor base.