【3·15 Special Topic】Equity Guardian | Analysis of Listed Companies' Failure to Timely Disclose Risk Announcements

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Risk Event Analysis for Listed Companies Failing to Disclose in a Timely Manner

Today, I want to talk about “Failure to Disclose Risk Announcements in a Timely Manner.” Many retail investors find these words boring, but they don’t realize that behind this paper, there may be risks of stock price plunges or even losing all their money. Understanding it is key to protecting your wallet.

01

What does “Failure to Disclose Risk Announcements in a Timely Manner” mean?

Professional Terms Explained Simply

Failing to disclose risks in a timely manner means that a listed company knows about bad news that could affect its stock price but does not inform investors immediately according to regulations.

According to Article 22 of the “Administrative Measures for Information Disclosure by Listed Companies” and Article 80 of the “Securities Law,” any major event that could significantly impact the stock price—such as facing large compensation lawsuits, large assets turning into bad debts, major debtors going bankrupt, or performance turning from profit to loss—must be disclosed within the prescribed trading days from the time the event is triggered. Failure to disclose on time constitutes a violation of information disclosure regulations. The company must issue a supplementary announcement explaining the situation and may face regulatory penalties.

02

Why is this considered a major risk announcement?

1. Direct violation of regulatory red lines, serious nature

The China Securities Regulatory Commission (CSRC) explicitly states that failing to disclose major information in a timely manner constitutes “illegal and non-compliant information disclosure.” Under Article 197 of the Securities Law, the company can be ordered to correct the violation, warned, and fined between 1 million and 10 million yuan; responsible senior executives can also be warned and fined between 500,000 and 5 million yuan. In severe cases, controlling shareholders and actual controllers may face similar fines or even be barred from securities markets. Additionally, stock exchanges can issue ST warnings based on listing rules, which can directly affect the company’s short-term stock performance.

03

Real Case:

The Painful Consequences of Concealing Risks

Case: Kejinyuan (Rights Protection) — Failure to Disclose Performance and External Guarantees Prompt Regulatory Action

This listed company was accused of two major undisclosed risk issues: first, large external guarantees that could affect the company’s debt repayment ability; second, significant changes in performance (such as a sharp decline in net profit) without timely releasing earnings forecasts or correction announcements, preventing investors from knowing about the company’s deteriorating operations in advance.

According to Article 22 of the “Administrative Measures for Information Disclosure by Listed Companies,” major events like large guarantees and significant performance changes that could impact stock prices must be disclosed within two trading days after the event occurs. Kejinyuan failed to disclose these issues in time, constituting delayed disclosure and violating Article 197 of the Securities Law regarding disclosure obligations. This illegal behavior could result in fines between 1 million and 10 million yuan, with responsible persons fined between 500,000 and 5 million yuan.

Due to failure to disclose risks promptly, Kejinyuan has been subject to investigation, warning letters, and other regulatory measures.

On the evening of April 3, 2025, the company announced receiving a “Notice of Filing” from the CSRC, officially disclosing that its wholly owned subsidiary had undisclosed external guarantees. The next day (April 4), the stock price plummeted, market trust sharply declined, and the stock experienced a significant drop, severely shrinking investors’ market value.

04

Guidelines for Retail Investors:

Mindset, Stock Selection, and Prevention

1. Mindset

When a holding company’s announcement indicates failure to disclose risks in a timely manner, don’t panic. First, carefully review the type of risk disclosed, then assess the severity of regulatory penalties.

2. Stock Selection Tips

When choosing stocks, consider “quality of information disclosure” as a key indicator. Focus on the “Risk Warning” section in periodic reports, and check whether the company frequently delays disclosures or if independent directors often raise objections to disclosures.

3. Preventive Measures

There are three main tips: First, don’t invest all your money in a single stock; diversification reduces the impact of a single company’s risk. Second, develop the habit of reading announcements, especially “Regulatory Inquiry Responses” and “Earnings Forecast Corrections.”

In the capital market, understanding failure to disclose risks in a timely manner helps you avoid pitfalls early. Hope we can all sharpen our eyes and invest more steadily and confidently.

(Written by: Guojin Securities Wealth Products Center)

Disclaimer: The information published in this column is for investor education purposes only and does not constitute any investment advice. Investors should not replace their independent judgment with this information or make decisions solely based on it. While we strive for accuracy and reliability, we do not guarantee the accuracy or completeness of the information and are not responsible for any losses resulting from the use of this information. Investing involves risks; please proceed with caution.