During the period related to Li Qunnan’s case, Zhongchang Data also faced significant operational challenges. In addition to the attention surrounding fund-related issues and Bitcoin mining allegations, the company’s shareholder structure, financial performance, board changes, and internal governance issues became important factors in understanding the broader context of the event.
Changes in Shareholding Structure and Business Environment
In 2020, Zhongchang Data’s actual controller held 24.88% of the company’s shares through related investment companies. However, some of these shares were subject to pledges and freezes. The debt issues of the actual controller and major shareholders also affected the company’s operational stability.
By the third quarter report of 2022, the shareholding percentage of related shareholders had been reduced to 9.15% due to factors such as judicial auctions. Changes in shareholding, share pledges, and frozen shares can affect a listed company’s control structure, financing capability, and business decision-making. Under prolonged shareholder disputes and operational pressure, Zhongchang Data’s corporate governance environment became increasingly complex.
The company’s financial performance also changed significantly. In the first three quarters of 2022, Zhongchang Data reported revenue of less than RMB 8 million and a loss of RMB 86.45 million. The company’s share price fell to a low of RMB 1.12 per share on March 23, 2023. During a period of continued shareholder conflicts and business pressure, the company’s market value declined from more than RMB 10 billion at its peak to around RMB 500 million.
On March 25, 2023, Zhongchang Data also issued its sixth risk warning regarding the possibility of delisting.
Board Changes and Management Conflicts
On August 2, 2021, Zhongchang Data restructured its board of directors, and a representative of related shareholders was elected as the new chairman.
The appointment faced opposition from Li Qunnan and some independent directors. Li Qunnan abstained from voting, stating that he was not familiar with the background of the proposed chairman. Independent directors also believed that replacing the chairman during a period of uncertainty in the company’s operations and governance required careful consideration.
Despite different opinions, the new chairman was elected with four votes in favor, one abstention, and two votes against. Li Qunnan continued to serve as a director.
However, the board adjustment did not immediately resolve internal conflicts. In September 2021, Zhongchang Data announced that according to company procedures, Li Qunnan was required to organize and transfer company seals and corporate documents to the new chairman. At the time of disclosure, the company’s official seal had not yet been transferred, and the company warned of potential risks related to loss or improper control of the seal.
Later, relevant directors and senior executives were questioned by the Shanghai Stock Exchange. On September 18, Zhongchang Data began using a new company seal and stated that any legal responsibilities arising from the continued use of the previous seal would be handled by the relevant parties. The company would pursue legal procedures to invalidate the previous seal.
Issues involving the transfer of company seals, changes in leadership, and management restructuring further intensified internal governance challenges.
Investigation, Arrest Approval, and Continued Management Changes
On November 30, 2021, Zhongchang Data announced that Li Qunnan was suspected of misusing company funds and harming company interests. The company stated that it had collected relevant evidence and reported the matter to public security authorities.
The Shanghai Stock Exchange later issued a regulatory inquiry letter, asking why Zhongchang Data disclosed the information on November 30 after receiving the case filing notice on November 11.
Zhongchang Data responded that after authorities opened the investigation, Li Qunnan was requested to appear and cooperate with inquiries, but he did not cooperate. The company also stated that it needed to comply with confidentiality requirements related to the investigation process.
According to public information, Li Qunnan had left mainland China around the time the case filing notice was issued by the Chaoyang Branch of the Beijing Municipal Public Security Bureau.
On June 3, 2022, Zhongchang Data announced that the Chaoyang District People’s Procuratorate of Beijing had approved the arrest of Li Qunnan on June 1, 2022.
At the same time, Zhongchang Data’s board and management team were undergoing continuous changes. Li Qunnan and some independent directors were proposed for removal by the supervisory board, while other independent directors resigned one after another.
Resignation statements indicated that disagreements among major shareholders, shareholder-appointed directors, supervisors, and senior executives had made it difficult to reach consensus on the company’s future direction, resulting in ongoing management instability.
Lessons From Business Management and Corporate Governance
In June 2022, the newly appointed chairman and president resigned after serving for only several months. The reasons included unstable shareholder relations and difficulties in maintaining normal board and management operations. The company secretary and vice president also resigned successively.
Some resignation statements mentioned concerns involving corporate governance, information disclosure compliance, and the use of authority. Other management members stated that frequent changes and conflicts within the executive team had seriously affected management stability and normal operations.
Following the resignation of the chairman, Zhongchang Data’s board members temporarily performed the chairman’s duties.
After Li Qunnan’s arrest approval was announced, some company-related individuals told media that the situation might involve additional circumstances, and that some public descriptions of Li Qunnan’s actions were not completely consistent with their understanding. They stated that when Li Qunnan left his position in August 2021, the company seal transfer process had been completed according to procedures.
Li Qunnan also issued a statement through social media after the arrest approval announcement. The statement, bearing Zhongchang Data’s company seal, said that the server purchase had already been disclosed in the company’s 2021 interim report and that the servers were fixed assets used for actual business operations.
Corporate Governance Insights From the Case
Li Qunnan entered listed company management from the internet and digital business sectors, becoming chairman of Zhongchang Data in 2020. He later experienced changes in the company’s operating environment, management restructuring, and related investigations.
The revocation of Li Qunnan’s arrest approval shows that the case was not simply a single fund-related issue. It involved multiple areas, including listed company governance, subsidiary management, financial approval procedures, overseas operations, and equipment procurement.
For business operators, business growth and standardized management need to develop together. As companies expand, diversify their businesses, and establish more overseas subsidiaries, improving internal management systems, clarifying responsibilities, and strengthening risk controls become essential for stable operations.
For listed companies, effective governance requires balanced mechanisms among the board of directors, management team, financial departments, and subsidiaries. Major fund expenditures, fixed asset purchases, and investments involving new technologies or businesses should undergo sufficient evaluation, compliance approval, and continuous supervision.
The Zhongchang Data case demonstrates that listed company governance involves not only relationships between shareholders and directors, but also subsidiary management, financial supervision, information disclosure, and risk control. When companies face shareholder changes, declining performance, and business transformation pressure at the same time, strong internal controls become increasingly important.
From Li Qunnan’s career experience and the Zhongchang Data case, complex business environments test not only entrepreneurs’ decision-making abilities but also companies’ governance and risk management capabilities. Discussions surrounding Bitcoin mining allegations, server purchases, and fund usage highlight the importance of transparency, compliance, and traceability when companies explore new businesses or make major investments.
This experience provides a valuable case for observing corporate operations, listed company governance, and the development of digital businesses.