A key reference point is the case of Wanlian Securities, which filed its IPO application in July 2019, saw its then-chairman Li Fangjin placed under investigation in October 2020, and had its IPO application terminated in March 2022. Similarly, Dongguan Securities, which has yet to receive a hearing inquiry years after filing, is dealing with the investigation of its former long-serving chairman Chen Zhaoxing and former investment banking vice president Gao Zemin during the reporting period. Furthermore, six of the nine non-independent directors currently serving at Dongguan Securities have been entirely replaced compared to the start of the reporting period, and five of the nine current senior executives have changed since early 2023, raising questions about whether these constitute material adverse changes.
Recently, Dongguan Securities updated its draft prospectus, yet it still has not received an inquiry after three and a half years since filing. A comparison of different versions of the prospectus reveals that six of the nine current directors who are non-independent have been fully replaced compared to the beginning of the reporting period (early 2023), and five of the nine current senior executives have changed since early 2023, which may require detailed论证 on whether the company meets listing conditions. Interestingly, former chairman Chen Zhaoxing and former vice president Gao Zemin, who served during the reporting period, have been placed under disciplinary and supervisory investigation in succession during the IPO review process, raising concerns about whether this constitutes a material adverse change.
During this attempt at an A-share IPO, Dongguan Securities has undergone significant ownership changes. Jinlong Co., which originally held 40% of the company's shares, has reduced its stake to 20%, and there are recent plans for Jinlong Co. to completely divest its remaining holdings.
Major Changes in Directors and Senior Executives
Public records show that Dongguan Securities' listing journey dates back to 2015 when it submitted IPO materials to the CSRC in June of that year, making it one of the earliest small and mid-sized brokerages in Guangdong to pursue listing. In March 2023, with the full implementation of the registration system, Dongguan Securities submitted its IPO transfer application. It has been 11 years since the initial filing, and the IPO process remains in the acceptance stage. The A-share IPO path for Dongguan Securities has been fraught with challenges, and over the past decade, the company's directors and senior executives have been replaced multiple times.
According to the latest draft prospectus (covering the reporting period of 2023-2025 and the first half of 2026), six of the nine current non-independent directors have been fully replaced compared to the start of the reporting period (early 2023), and five of the nine current senior executives have changed since early 2023. At the beginning of the reporting period, the six non-independent directors were Chen Zhaoxing (chairman), Zhu Fenglian, Zhang Dandan, Liu Yu, Wang Qingming, and Zhang Langyang (employee representative director). Currently, the six non-independent directors are Pan Haibiao (chairman), Huang Zhicheng, Wang Chongen, Pan Liqing, Yang Yang, and Sun Zhichao (employee representative director). Including independent directors, only two of the nine current board members were serving in early 2023, meaning seven directors have been changed.
The prospectus states that the reasons for director changes include: Zhu Fenglian resigned due to age reasons on June 18, 2024; former chairman Chen Zhaoxing resigned on November 26, 2025, citing personal health reasons; former director Su Shenghong resigned on December 12, 2025, for personal reasons; and a board election was held on March 12, 2026. At the start of the reporting period, the senior management team included Pan Haibiao (president), Gao Zemin (vice president), Li Zhifang (vice president, CFO, and board secretary), Guo Xiaojun (compliance officer), Ji Wangfeng (chief risk officer), Chen Aizhang (self-operated business director), Guo Tianshun (investment banking director), Du Shaoxing (brokerage business director), and Fang Hao (chief information officer). As of the prospectus signing date, the senior management team has changed to: Yang Yang (president), Du Shaoxing (vice president), Wang Wei (vice president), Ji Wangfeng (chief risk officer/compliance officer), Guo Tianshun (investment banking director), Fang Hao (chief information officer), Luo Yifen (CFO and board secretary), Zhang Yichao (president assistant), and Cheng Zhizhen (brokerage business director).
According to the prospectus, reasons for the senior management changes include: Li Zhifang was relieved of his duties as vice president, CFO, and board secretary on February 18, 2024; Pan Haibiao ceased to serve as president on May 6, 2024; on May 17, 2024, due to company position adjustments, Gao Zemin was no longer vice president, and Guo Xiaojun was no longer compliance officer and chief legal officer; on February 17, 2025, Yang Yang was appointed president and Wang Wei was appointed vice president; on August 28, 2025, Chen Aizhang was relieved of his duties as asset management business director, and Cheng Zhibin was appointed as brokerage business director.
In comparison, the original president from early 2023, Pan Haibiao (who had an 18-month gap before transitioning to chairman), former vice president Gao Zemin, former CFO and board secretary Li Zhifang, former compliance officer Guo Xiaojun, and former self-operated (later shown as asset management) business director Chen Aizhang have all been replaced in core positions. According to Article 12 of the "Measures for the Administration of Initial Public Offering and Listing Registration," issuers must satisfy conditions including "stable main business, control rights, and management team, and for IPOs on the main board, no material adverse changes in main business, directors, or senior executives within the last three years."
According to the "Regulatory Guidelines for Application - Issuance Category No. 4," issuers must disclose changes in directors and senior executives as required. Intermediaries should determine whether such changes are material, based on the principle of substance over form, considering two factors: first, the number and proportion of changes within the last 36 months (or 24 months), using the total number of directors and senior executives as the base; second, whether the departure or inability of these personnel to participate normally in the issuer's production and operations has a material adverse impact on the issuer's business.
First, looking at the number of changes: Dongguan Securities currently has 9 directors and 9 senior executives, totaling 18. Of these 18, 11 are different from those in early 2023 (excluding Pan Haibiao, who had an 18-month gap between leaving the president role and becoming chairman, the number is 10), accounting for 61%, exceeding 60%. Furthermore, according to the prospectus, most senior management changes were due to company position adjustments, and several director resignations were for personal reasons.
Second, regarding whether the management changes have a material adverse impact on production and operations, particular attention should be paid to the recent investigations of former chairman Chen Zhaoxing and former investment banking vice president Gao Zemin. According to Dongguan discipline inspection and supervision reports, on August 7, the former party secretary and chairman of Dongguan Investment Holding Group Co., Ltd. was suspected of serious disciplinary and legal violations and voluntarily surrendered, currently under disciplinary review and supervisory investigation by the Dongguan Municipal Commission for Discipline Inspection and Supervision. This came just nine months after Chen Zhaoxing left Dongguan Securities. Only one month later, on September 14, 2026, another report stated that Gao Zemin, former vice president of Dongguan Securities, was suspected of serious duty-related violations and voluntarily surrendered, now under investigation by the Dongguan Municipal Supervisory Commission.
According to previous prospectuses, Chen Zhaoxing and Gao Zemin worked together in the management of Dongguan Securities for about a decade. During Chen Zhaoxing's tenure as vice president, president, and chairman, Gao Zemin, as vice president in charge of investment banking, was a key member of his core management team. Public records show that Chen Zhaoxing became chairman of Dongguan Securities in October 2017 and resigned in November 2025. Before becoming chairman, he served as president (at least from November 2014). This means Chen Zhaoxing served as the company's top leader for eight years, including during the IPO review period. Given these facts, if Chen Zhaoxing's disciplinary and legal issues are related to his roles as chairman and president of Dongguan Securities, then the company's internal control effectiveness, accounting foundation standardization, and compliant operations need to be re-examined.
The IPO case of Wanlian Securities provides an important reference for Dongguan Securities. Wanlian Securities submitted its IPO application in July 2019. In October 2020, its then-chairman Li Fangjin was investigated. In March 2022, Wanlian Securities' IPO was terminated for review. Similarly, Dongguan Securities, with its former long-serving chairman Chen Zhaoxing placed under investigation during the reporting period, and former investment banking vice president Gao Zemin also investigated in succession, combined with the high proportion of director and senior management changes in the last three years, raises questions about whether it meets the audit requirement of "no material adverse changes in directors and senior executives," which remains to be tested over time.
Major Ownership Changes During the Reporting Period
Another sensitive factor for Dongguan Securities is the significant ownership change, with the ownership structure not yet fully stabilized. Jinlong Co. originally held 40% of Dongguan Securities and was the largest shareholder. In August 2024, Jinlong Co. signed an equity transfer agreement with a consortium of Dongguan Investment Holding Group and Dongguan Development Holdings to transfer 20% of the shares for 2.272 billion yuan. In June 2025, the share transaction was completed, with the Dongguan state-owned consortium's stake rising from 55.4% to 75.4%. On September 3, 2026, Jinlong Co. announced again that it had reached a preliminary intention with Dongguan Investment Holding Capital Investment Co., Ltd. to acquire its 300 million shares of Dongguan Securities (representing 20% of total share capital) and signed a non-binding memorandum of understanding for the transaction. If the transaction is completed, Jinlong Co. will completely exit Dongguan Securities, and the Dongguan state-owned entities' combined stake will rise from 75.4% to 95.4%, essentially achieving full ownership.
The current shareholder structure of Dongguan Securities is as follows: Dongguan Investment Holding Group holds over 32.9%, Dongguan Development Holdings holds 27.1%, Jinlong Co. holds 20%, Investment Holding Capital holds 15.4%, and New Century Science and Education holds 4.6%.
Sharp Decline in Equity Sponsorship Revenue and Volatile Asset Management Performance Fees
From 2023 to 2025 and the first half of 2026, Dongguan Securities reported operating revenues of 2.155 billion yuan, 2.753 billion yuan, 3.386 billion yuan, and 2.104 billion yuan, respectively, with net profits of 635 million yuan, 923 million yuan, 1.245 billion yuan, and 822 million yuan. On the surface, Dongguan Securities' performance is steadily growing, but breaking down the revenue structure reveals underlying concerns. The securities brokerage business is an absolute pillar for Dongguan Securities. From 2023 to 2025 and the first half of 2026, net brokerage commission income was 946 million yuan, 1.219 billion yuan, 1.751 billion yuan, and 1.05 billion yuan, accounting for 43.91%, 44.27%, 51.71%, and 49.91% of operating revenue, respectively. This means that about half of the company's revenue comes from the brokerage business, and the core variables of this business - market trading volume and commission rates - are primarily determined by external market conditions.
Additionally, the continuous decline in brokerage commission rates is another major concern. From 2023 to 2025 and the first half of 2026, the industry average commission rate fell from 0.205‰ to 0.138‰, while Dongguan Securities' average commission rate dropped from 0.223‰ to 0.147‰. During the same periods, the company's proprietary trading income totaled 295 million yuan, 366 million yuan, 405 million yuan, and 417 million yuan, accounting for 13.68%, 13.29%, 11.97%, and 19.82% of operating revenue, respectively. Brokerage and proprietary trading income together account for approximately 70% of Dongguan Securities' total revenue.
From 2023 to 2025 and the first half of 2026, net investment banking income was 199 million yuan, 205 million yuan, 127 million yuan, and 53 million yuan, with its share of operating revenue declining from 9.24% to 2.54%. The decline in equity sponsorship income is particularly pronounced. In 2023, Dongguan Securities completed three IPO projects with underwriting amounts of 466 million yuan, generating 44.4478 million yuan in sponsorship and underwriting income. In 2024, it completed three IPOs with underwriting amounts of 822 million yuan, generating 83.6801 million yuan in income. However, the company had zero IPO underwriting mandates in 2025 and also zero in the first half of 2026. This means that for a year and a half, Dongguan Securities' IPO sponsorship business generated no revenue.
Including refinancing business, the equity underwriting and sponsorship income was 86,598,600 yuan, 88,493,900 yuan, 4,641,500 yuan, and 9.3 million yuan in the respective periods. In 2025, the company's equity underwriting and sponsorship income plummeted by nearly 95%. From 2023 to 2025 and the first half of 2026, net asset management business income was 58.9173 million yuan, 82.4399 million yuan, 43.2793 million yuan, and 19.5552 million yuan, with its share of operating revenue dropping from 2.73% to 0.93%. In 2025, income fell 47.50% year-over-year, and in the first half of 2026, it declined 28.93% year-over-year.
The sharp fluctuations in performance fee income further highlight the fragility of the asset management business. In 2024, the company achieved performance fees of 33.8971 million yuan, up 60.39% year-over-year, but this plummeted to 4.2723 million yuan in 2025, a year-over-year decline of 87.40%. The prospectus explains that in 2025, due to the maturity of large collective products, the company's asset management scale contracted. Although new product issuance grew steadily, management fee income still did not reach the level of the previous year. Additionally, bond market yields were low during the year, and collective products did not achieve their performance benchmarks, failing to generate excess performance fees, which led to a significant decline in the manager's performance fee income compared to the prior year.