Five senior executives from Wanfu Biotechnology (Hunan) Agricultural Development Co - the first ChiNext-listed company exposed for financial fraud - have announced their intentions to resign, according to a notice filed Wednesday with the Shenzhen Stock Exchange (SZSE).
The five staff members in question include four vice general managers and one employee serving both as a vice general manager and board secretary, the filing stated. Personal reasons were cited for the resignations. In addition, Wanfu's two independent directors will also step down from their duties. This round of resignations will leave only two members of Wanfu's current management team on staff - its chairman and chief financial officer.
To make up for this loss, Wanfu said it plans to hire three new vice general managers, one of whom will also serve as its board secretary. The company mentioned as well Wednesday that it has nominated two new candidates for independent directorships.
"Seeing such a large contingent of top executives vacate their posts at one time is rare for a mainland-listed firm," Zhang Xin, an analyst from Guotai Junan Securities, told the Global Times. "But in this case, it is understandable given Wanfu's current situation."
Wanfu was found to have artificially inflated its revenue and profits before and after the launch of its IPO in September 2011, China's securities regulator said on May 10. Wanfu's chairman and 19 other upper-level staff members - including the five managers mentioned above - will receive warning notes from the regulator as well as fines ranging from 50,000 yuan ($8,135) to 300,000 yuan, according to information released from the China Securities Regulatory Commission (CSRC).
Wanfu has already received two public censures from the SZSE - one in November 2012 and another in March 2013. Under rules issued by the exchange in April 2012, a company can be ejected from the ChiNext board if it receives three public censures within a 36-month period.
Faced with a heightened risk of delisting, Wanfu's board of directors also underwent a transition in May which saw its then-vice chairman and four board members step down. After adding two new members, the company's board membership went from nine to six.