China’s SRC called out Lenovo, ordering the company to submit more accurate disclosures
On April 14, China’s Securities Regulatory Commission orders Lenovo to fix several issues regarding its information disclosures. The SRC conducted an on-site inspection in 2021, from September 8 to September 18, and found Lenovo failed to file reports on time, and did not disclose pledging of shares in some of its subsidiaries, as well as a lack of clarity in the definition of operating and non-operating transactions.
In addition, the SRC found Lenovo, who’s listed in Hong Kong, failed to file its 2021 financial report to Shanghai Stock Exchange Bond Market on March 31, 2022. Lenovo has been given 30 days to make amendments.
Lenovo, one of the biggest PC makers in the world, has previously been caught in a public criticism crisis, as independent scholar and influencer Sima Nan, questions Lenovo’s legitimacy as a state-associated enterprise. Sima Nan posted a series of videos, grilling Lenovo and accusing Liu Chuanzhi, former Lenovo president, of abusing state-owned assets, overpaying its executives, having too many foreign executives, evading taxes, and threatening national security. The influencer’s videos have caught national attention, inciting millions to rally against Lenovo.
Over the years, Lenovo has been criticized many times for not supporting other Chinese companies such as Huawei, branding itself as a multinational company, and denying its Chinese roots. Founded in 1984, Lenovo has deep ties to the Chinese Academy of Sciences, as many of its founding engineers came from the academy. The CAS also invested in Lenovo, and still holds a 36% share of Legend Holdings, Lenovo’s parent company.
Prior to the crisis, Lenovo has withdrawn its 10-billion-yuan listing application on the Shanghai Stock Exchange in October 2021. It was suspected that Lenovo did not fit the requirements to list on SSE STAR Market, due to its relatively low R&D costs. Lenovo has denied the claim and said it will invest over 100 billion RMB in R&D in the next five years.