Lianhua Supermarket Holdings Co., Ltd. Announces Planned Termination of Equity Entrustment Agreement
Key Points of the Announcement
- Lianhua Supermarket Holdings Co., Ltd. (the “Company”) has announced the intention of its major shareholders, Bailian Group Co., Ltd. (“Bailian Group”) and Shanghai Bailian Group Co., Limited (“Shanghai Bailian”), to terminate the Equity Entrustment Agreement.
- The Equity Entrustment Agreement, entered into in April 2015, allowed Shanghai Bailian to exercise certain shareholder rights (excluding share income and disposal rights) over 614,160,000 Domestic Shares held by Bailian Group.
- Bailian Group holds 649,661,400 Domestic Shares, or 43.91% of the Company’s total issued shares. Of these, 614,160,000 were managed under the agreement by Shanghai Bailian.
- Shanghai Bailian directly holds 224,208,000 Domestic Shares (15.15% of total issued shares). Bailian Group is the controlling shareholder of Shanghai Bailian, holding approximately 50.51% of its shares.
- An annual management fee of RMB300,000 was paid by Bailian Group to Shanghai Bailian during the term of the agreement.
Important Details for Shareholders
- Reversion of Shareholder Rights: Upon completion of the termination, Bailian Group will regain full shareholder rights over the 614,160,000 Domestic Shares previously managed by Shanghai Bailian.
- Financial Reporting Impact: After the termination, Shanghai Bailian will no longer include Lianhua Supermarket Holdings Co., Ltd. in its consolidated financial statements. This may affect both companies’ reported financial positions.
- Takeovers Code Waiver: Bailian Group has received a waiver from the Securities and Futures Commission, ensuring that the termination does not trigger an obligation for Bailian Group or its concert parties to make a general offer for the Company’s shares under the Hong Kong Takeovers Code. This removes a potential source of market uncertainty.
- Strategic Purpose: The termination is aimed at allowing Shanghai Bailian and the Company to concentrate resources on transforming and upgrading their core businesses, supporting high-quality development.
- Status and Next Steps: The termination is currently in the planning phase. No agreement has been signed yet, and further deliberation, communication, and consultation are required. All procedures must comply with relevant laws, regulations, and the companies’ articles of association.
- Investor Caution: The Company has advised shareholders and the public to exercise caution in dealing with its securities, as the termination process is ongoing and subject to change.
Potential Impact on Share Price
The planned termination of the Equity Entrustment Agreement is a significant corporate event. The reversion of shareholder rights to Bailian Group could impact the Company’s governance structure and control dynamics, especially with Shanghai Bailian no longer consolidating the Company in its financial statements. This may result in changes to perceived stability and future strategic direction of Lianhua Supermarket Holdings Co., Ltd. Investors should also be aware that the waiver of the Takeovers Code requirement removes the possibility of a mandatory general offer, which might otherwise have affected share liquidity and pricing.
Additionally, the stated aim to focus on core business transformation and high-quality development could signal future strategic moves or restructuring, which are typically price-sensitive. However, since the termination plan is not yet finalized and is subject to approval, shareholders should monitor further announcements closely for definitive impacts.
Corporate Governance
The board of directors, including both executive and non-executive members as well as independent non-executive directors, is overseeing the process. The announcement was made by Chairman Pu Shao-hua from Shanghai, China, on 13 May 2026.
Disclaimer
This article is for informational purposes only and should not be construed as investment advice. The information provided is based on current public disclosures by Lianhua Supermarket Holdings Co., Ltd. The termination of the Equity Entrustment Agreement is still in the planning stage and subject to further corporate and regulatory approvals. Investors are advised to exercise caution and consult their financial advisors before making any investment decisions.
