The Hong Kong Exchanges and Clearing Limited and the Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
（A joint stock limited company incorporated in the People's Republic of China with limited liability）
（Stock Code:0042）
Announcement on Litigation Progress
This announcement is made pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions of Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
Subsequent to the release of the "Litigation Involving Announcement" on 7 July 2017, "Announcement on Litigation Progress"on 1 August 2018 and 28 August 2019，Northeast Electric Development Company Limited (hereinafter referred to as "Northeast Electric" or the "Company") received the civil judgment (Qiong 96 Min Chu No.81) issued by the First Intermediate People's Court of Hainan Province (hereinafter referred to as "Hainan First Intermediate People's Court") on 17 September 2020. Shenyang Intermediate Court has given a first-instance judgment on the contract dispute between Shenyang Tiexi District State-owned Assets Supervision and Administration Bureau (hereinafter referred to as "Tiexi SASAC") and Northeast Electric, Shenyang High Voltage Switchgear Co., Ltd., (hereinafter referred to as "Shenyang High Voltage Switchgear") and New Northeast Electric (Shenyang) High Voltage Switchgear Co., Ltd. (hereinafter referred to as "New Northeast Electric"). The results of the first-instance judgment of the lawsuit are hereby disclosed below.
- General Information about the Case
On 9 May 2007, the plaintiff Tiexi SASAB signed the "Agreement on the Resettlement of Employees of Shenyang High Voltage Switchgear Co., Ltd." with the defendants Northeast Electric (hereinafter referred to as the "1st defendant") and Shenyang High Voltage Switchgear Co., Ltd. (hereinafter referred to as the "2nd defendant"). The agreement stipulated that the resettlement fee shall be financed and paid by the 1st defendant. On 30 June 2008 and 28 November 2008, the
plaintiff signed the "Agreement on the Proper Resettlement of Employees of Shenyang High Voltage Switchgear Co., Ltd." and the "Supplementary Agreement on the Proper Resettlement of Employees of Shenyang High Voltage Switchgear Co., Ltd." with the 1st defendant and the 2nd defendant.
According to the agreements, New Northeast Electric Co., Ltd. (hereinafter referred to as the "3rd defendant") shall provide joint and several guarantees for the resettlement fee payable by the 1st defendant. As at July 7, 2011, the plaintiff had received a total of RMB103.86 million of the employee resettlement fee, and the remaining RMB28.53 million of the employee resettlement fee was still in arrears.
Therefore, the plaintiff has brought a lawsuit to the court, applying to the court to rule according to laws that the 1st defendant shall repay all the arrears of RMB28.53 million, interest of RMB7,788,690 and liquidated damages of RMB1,426,500, totaling RMB37,745,190, to the plaintiff; the 2nd defendant shall bear joint liability for the aforementioned debt of the 1st defendant; and the 3rd defendant shall provide joint and several guarantees for the aforementioned debt of the1st defendant.
On June 12 2018, the case was heard in the Liaoning Shenyang Municipal Intermediate People's Court (hereinafter referred to as "Shenyang Intermediate Court" or the "Court"). On July 18, the Shenyang Intermediate People's Court issued a civil written order ((2017) Liao 01 Min Chu No.430). The Shenyang Intermediate People's Court held that when the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau reclaimed its rights to Northeast Electric on July 21, 2016, it has been more than two years of statute of limitations. The Shenyang Intermediate People's Court rejected the claim that the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau requested the defendant Northeast Electric to pay arrears of RMB28.53 million, interest and liquidated damages.
Judgment made by the Shenyang Intermediate Court is as followings:
- The defendant Shenyang High Voltage Switchgear Co., Ltd. shall pay the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau arrears of RMB24.99 million and liquidated damages of RMB1,249,500 within 15 days from the date when this judgment takes effect.
- Reject the other claims of the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau.
The plaintiff Tiexi SASAB has appealed to Shenyang Intermediate Court during the appeal period.
On 21 August 2019, the Civil Order ((2018) Liao Min Zhong No. 1032) was issued by Liaoning Provincial Higher People's Court, ruling as follows: The Civil Judgment ((2017) Liao 01 Min Chu No. 430) issued by Shenyang Municipal Intermediate People's Court of Liaoning shall be abrogated; A retrial for this case shall be performed by Shenyang Municipal Intermediate People's Court of Liaoning.
For details, please refer to the announcements of the Company on the dated 7 July 2017, 1 August 2018 and 28 August 2019.
II. Progress of the Litigation
The case has been transferred from Shenyang Intermediate People's Court to the jurisdiction of Hainan First Intermediate People's Court on 11 February 2020 and has come to trial on 10 August 2020. On 16 September 2020, the case was heard in the Hainan First Intermediate People's Court issued a civil written order (Qiong 96 Min Chu No.81). The Hainan First Intermediate People's Court held that when the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau reclaimed its rights to Northeast Electric, it has gone beyond the limitation of action. The Hainan First Intermediate People's Court rejected the claim that the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau requested the defendant Northeast Electric to pay arrears of RMB28.53 million, interest and liquidated damages.
It was the judgment made by the Hainan First Intermediate People's Court that:
- The defendant Shenyang High Voltage Switchgear Co., Ltd. shall pay the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau arrears of RMB28.53 million and liquidated damages of RMB1,249,500 within 15 days from the date when this judgment takes effect.
- Reject the other claims of the plaintiff Tiexi District State-owned Assets Supervision and Administration Bureau.
Those disagree with this judgment may submit an appeal to the court within 15 days from the date of delivery of the judgment and appeal to the Hainan Higher People's Court.
III. Whether there are some other undisclosed litigations or arbitrations
As of the date of the announcement, the Company and the subsidiaries have not had any other litigations or arbitrations that should be disclosed but have not been disclosed.
IV. Possible impacts of the litigation in the announcement on the current or future profit
According to the legal opinion and based upon the principle of financial prudence, in 2017, the Company has also set aside the provision for estimated liabilities according to the amount of money involved in the case of RMB37,745,190, with details referring to 2017 Annual Report published on 29 March 2018.
In accordance with the first instance judgement, Northeast Electric is not subject to any joint. As the judgment was made for the first stance, the impacts of the litigation in the announcement on the current or future profit are pending. The Company will timely perform its announcement obligation in relation to the progress of the case according to related regulations.
By order of the Board
Zhu Jie
Chairman
Haikou, Hainan Province, the PRC
17 September 2020
As at the date of this Announcement, the Board comprises of six executive Directors, namely Mr. Zhu Jie, Mr. Wang Yongfan, Mr. Bao Zongbao, Mr. Su Weiguo, Mr. Guo Qianli and Mr. Li Guoqing; and three independent non-executive Directors, namely Mr. Li Ming, Mr. Fang Guangrong and Mr. Wang Hongyu.
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