Ningbo GQY Video & Telecom Joint-Stock Co. Ltd. (300076.CN) earned the ire of its shareholders when it tried to spend 78 percent of its profit on buying a used Rolls-Royce limousine from a company director.
The company, which makes video products, saw its share price plunge 4.14 percent on the secondary market on Tuesday after the announcement, forcing it to cancel the purchase in the evening, according to regulatory filings.
The board earlier approved the plan to acquire a Rolls-Royce Phantom, model SCAIS685 (without a car plate), from Yuan Xiangyang for 580,000 yuan (US$94,785), the company said a stock exchange filing on Tuesday.
Yuan is the wife of company controller Guo Qiyan, both of whom are company directors.
It said the purchase was to “improve company’s image because the shortage of VIP reception cars has hindered the company’s business expansion for years”.
It turned out that the price of the deal was wrongly stated in the original filing — it should be 5.8 million yuan, not 580,000 yuan. It filed another notice with the stock exchange later on Tuesday to make the correction.
Several shareholders took to the social media to register their anger. They pointed out that the car purchase represented about 78 percent of the company’s net profit last year.
In the last filing, GQY Video said Guo and his wife would let the company use the car for free for the next five years.
Shareholders were not mollified: the stock plunged another 5.93 percent on Wednesday.
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