Nov. 10 (NBD) -- Chinese actress Zhao Wei have received a five-year ban from trading in the mainland stock market for irregularities connected with a takeover bid, according to company filing on the Shanghai Stock Exchange on Friday.

Zhao will not be allowed to serve as an board member, supervisor, and top executive of listed companies and to trade securities during the five years, said Wang Zhibin from a Shanghai-based lawyer firm. 

Last December, Zhao's company, Tibet Longwei Culture & Media, announced it would acquire 29.14 percent stake of Zhejiang Wanjia Co., Ltd. (predecessor of Zhejiang Sunriver Culture Co., Ltd.) for 3.06 billion yuan (461.7 million U.S. dollars). Under the proposed share transfer agreement at the time, Longwei would offer 60 million yuan (9.1 million U.S. dollars) in cash, while the remaining 80 percent would come from borrowed money.

According to an earlier filing, Longwei was said to loan 1.5 billion yuan (226.3 million U.S. dollars) from Tibet Yinbixin Asset Management and to raise around 1.5 billion yuan (226.2 million U.S. dollars) from financial institutions through mortgage financing. However, China CITIC Bank has turned down its request, and Yinbixin also refused to provide to Longwei the remaining 1.2 billion yuan (181.0 million U.S. dollars) of loan. Failing to get funds, Zhao's company which initially attempted to buy a 29.1 percent stake in Zhejiang Wanjia scaled the proportion down to 5 percent.

However, the revised plan didn't go as planned neither. Despite a written notice from Zhejiang Wanjia, Longwei didn't manage to submit required materials for share transfer in time. On April 1, Zhejiang Wanjia decided to end the deal over unpredictable risks as Longwei was facing an investigation at that time.

From Jan 17 of 2016 to July 21 of 2017, the share price of Zhejiang Wanjia tumbled 63.88 percent from its peak on Jan 17.

The China Securities Regulatory Commission (CSRC) ruled that Zhao and her company had violated disclosure rules by announcing merger and acquisition intentions at a time when they lacked sufficient resources, which seriously misled investors. The actress and her husband Huang Youlong as well as their representative Zhao Zheng were each fined 30,000 yuan (4,526.1 U.S. dollars). Moreover, the couple was banned from trading in the mainland stock market for 5 years by CSRC. 

The lawyer Wang said that Longwei Culture & Media should take full responsibility of that matter. Investors who bought Zhejiang Wanjia's shares between Jan 12 and Mar 31 of 2017 and are still holding those shares are entitled to file claims for compensation.  

Email: tanyuhan@nbd.com.cn