5-Day Lightning Campaign: From 100 Million Missing to the Case Being Filed by the China Securities Regulatory Commission, the Dream of Joyinmate’s Major Shareholder as a “Cash-Withdrawal Machine” Is Shattered

Ask AI · Why did the regulatory blitz initiate case filing in 5 days? What is the deeper meaning behind it?

21st Century Business Herald Reporter Cui Wenjing

On April 1st, Xilinmen Health Sleep Technology Co., Ltd. (hereinafter referred to as “Xilinmen”) released four major announcements in succession, fully exposing the internal crisis hidden within this mattress industry leader under the spotlight of the capital market.

The company was under investigation by the China Securities Regulatory Commission (CSRC). The actual controller was under investigation by the CSRC. Shares held by the controlling shareholder and its concerted parties were judicially frozen. Xilinmen, as the plaintiff, sued the controlling shareholder and its concerted parties in court, claiming nearly 480 million yuan in damages.

Each of the four announcements alone is enough to alarm investors.

The trigger for all this can be traced back to March 27. On that day, Xilinmen disclosed that 100 million yuan of funds from its subsidiary had been illegally transferred by internal personnel. On the same day the announcement was issued, the Shanghai Stock Exchange swiftly issued a regulatory work letter, requiring the company to conduct a comprehensive self-examination.

Once the regulatory “radar” was activated, it precisely pinpointed the problem. Under strong regulatory urging, Xilinmen launched an internal self-check, and within just a few days, a more shocking truth surfaced: the controlling shareholder was suspected of using complex methods such as loan transfers and factoring financing to treat the listed company as a personal “cash machine.” Non-operating funds occupied up to 190 million yuan, far exceeding regulatory red lines.

From the Shanghai Stock Exchange’s issuance of the regulatory work letter on March 27 to the CSRC’s formal case filing on April 1, only five days passed. From discovering the problem to urging self-examination, from exposing the truth to initiating accountability, the regulatory authorities tore open this company’s internal control black hole with lightning speed.

This company, once marketed with the slogan “Protecting the Spine,” is now pushed to the edge of a risk warning cliff due to internal governance “collapse.”

The April 1 announcement was, for Xilinmen, akin to a public “trial.”

The disclosed information showed that both the company and its actual controller, Chen Ayu, received notices of case filing from the CSRC, both pointing to “suspected information disclosure violations.” This means that the regulators have already obtained clues sufficient to initiate case procedures—this is not just an ordinary inquiry letter but a formal “knock on the door” for investigation.

But what is truly remarkable is the astonishing efficiency of this regulation behind the scenes.

Rewinding to March 27, the day Xilinmen announced that 100 million yuan of funds from its subsidiary, Xitu Technology, had been illegally transferred. Almost simultaneously, the Shanghai Stock Exchange’s regulatory work letter had already been delivered to the company, requiring a comprehensive self-examination of related matters. There was almost no time gap between problem exposure and regulatory intervention. The SSE’s quick response was like a stone thrown into a calm lake, triggering a series of chain reactions.

Under the strong urging of the regulatory work letter, Xilinmen was forced to conduct an internal self-check. Within just a few days, the issue of controlling shareholder funds being occupied behind complex transactions was uncovered layer by layer. From loan transfers to factoring financing, a multi-billion-yuan利益输送链 gradually became clear.

The CSRC’s action was even more like a “lightning war.” On March 27, the SSE issued a work letter, and by April 1, the CSRC had formally filed a case—only five days apart.

What is more eye-catching is that the case filing and Xilinmen’s lawsuit against the controlling shareholder happened on the same day. On April 1, Xilinmen, as the plaintiff, sued the controlling shareholder Zhejiang Huayi Intelligent Manufacturing Co., Ltd., the concerted party Huahan Investment, and the actual controller Chen Ayu in court. The total involved amount reached 478 million yuan—this figure is 1.48 times Xilinmen’s net profit attributable to the parent in 2024.

The details disclosed in the complaint are even more shocking. The controlling shareholder and its related parties are suspected of infringing on company interests through two modes: one is the loan transfer mode, where the controlling shareholder has used company loans for transfer business, with 72 million yuan still unreturned; the other is the factoring financing mode, where the controlling shareholder applied for financing from banks in the name of suppliers, with the funds ultimately flowing to the controlling shareholder and designated accounts, totaling over 406 million yuan. These funds actually obtained by the controlling shareholder still impose payment obligations on Xilinmen. Due to some accounts payable maturing, Xilinmen has already borne a payment obligation of over 63 million yuan, and its subsidiary Shunxi has also borne over 8.11M yuan.

Behind these figures lies an unsettling fact: the controlling shareholder may regard the listed company as a personal “cash dispenser,” and the “surgical knife” for draining the company’s assets is hidden within complex financing arrangements and related-party transactions. These operations likely bypassed proper approval procedures and failed to fulfill disclosure obligations—precisely the reason for the CSRC’s investigation of “suspected information disclosure violations.” The swift regulatory intervention exposed these hidden operations within just a few days.

Meanwhile, the shares held by the controlling shareholder and its concerted parties were also judicially frozen. The actual controller Chen Ayu’s 8.107 million shares were fully frozen, accounting for 100% of his holdings; Zhejiang Huayi Intelligent Manufacturing’s 3.16M shares and Huahan Investment’s 8.4 million shares were also frozen. Although these frozen shares account for only about 14.69% of the total holdings of the controlling shareholder and its concerted parties, the fact that the actual controller’s shares are “completely wiped out” sends a clear signal: this crisis is no longer just a matter of accounting but a genuine legal dispute.

On March 27, a notice became the key “domino” that toppled this crisis.

That day, Xilinmen disclosed a shocking piece of news: its subsidiary, Xitu Technology Co., Ltd. (“Xitu Technology”), had its bank account funds illegally transferred by internal personnel, with a total amount of up to 100 million yuan.

Note, this is not misappropriation or occupation, but “illegal transfer”—in simple terms, someone directly “moved” the company’s money. Xilinmen applied for criminal investigation with the police on March 26, indicating that this is no longer an internal dispute but a case entering criminal investigation.

It is worth noting that Xilinmen froze related bank accounts as a protective measure, with approximately 900 million yuan frozen. The 100 million yuan transferred and the 900 million yuan frozen sum to over 1 billion yuan. What does this number mean? It accounts for 26.54% of Xilinmen’s most recent audited net assets and 42.69% of its cash and cash equivalents—meaning over 40% of the company’s cash on hand has either disappeared or been locked up and unusable.

This seemingly isolated incident of subsidiary funds being transferred could have been treated as an “accidental case.” But the regulators’ radar is far more sensitive than imagined. On the same day the announcement was issued, the SSE’s regulatory work letter had already been delivered to Xilinmen, involving the listed company itself, directors, senior executives, controlling shareholders, and the actual controller.

This regulatory work letter became the “fuse” that ignited subsequent events. Under strong regulatory pressure, Xilinmen had to conduct an internal self-examination. As the investigation deepened, the long-term occupation of funds by the controlling shareholder gradually surfaced. From March 27 to April 1, in just a few days, a nearly 500 million yuan利益侵占 network was uncovered layer by layer.

The CSRC’s follow-up speed further demonstrated its “zero tolerance” stance. While Xilinmen was conducting internal self-checks, the CSRC had already initiated investigation procedures. On March 27, the SSE issued a work letter, and by April 1, the CSRC officially filed a case—forming a seamless regulatory chain. The rapid coordination between the exchange’s daily supervision and the CSRC’s case filing is extremely rare in previous A-share regulatory practices.

If the transfer of subsidiary funds was an “accident,” then the occupation of funds by the controlling shareholder is a “deep-rooted problem.” And it was precisely the regulatory pressure that forced these “deep-rooted problems” into the open.

Under the supervision of the regulatory work letter, Xilinmen finally exposed these “family secrets” through self-examination. As of the announcement date on April 1, the total non-operating funds occupied by the controlling shareholder and related parties amounted to 190 million yuan. This amount exceeded 5% of Xilinmen’s most recent audited net assets, triggering the “special treatment” (ST) risk warning condition.

The rules are clear: if the controlling shareholder and related parties fail to settle or rectify within one month, the company’s stock will be subject to other risk warnings. The one-month countdown has begun, and time is running out for Xilinmen. The exposure of this result is a direct consequence of the regulatory intervention forcing the company to “self-diagnose.” Without the regulatory work letter, these fund occupation issues might have continued to hide behind complex transactions, with no one knowing when they would surface.

But that’s not all. The announcement also contains an “unfinished sentence”: besides non-operating funds occupation, the controlling shareholder and related parties also have violations involving providing guarantees without approval. The specific amount has not been disclosed, only noting “subject to further investigation by the company and final determination by regulatory authorities.” This suggests that the 190 million yuan occupied funds disclosed so far may not be the full picture, and the actual number could change.

Audit risks are also present. The announcement explicitly states that if the auditing agency issues a non-unqualified opinion on the company’s internal control effectiveness or the 2025 audit report due to this incident, the company’s stock may be subject to other risk warnings or delisting risk warnings after the 2025 annual report is disclosed. In other words, besides the one-month ST risk, there is a heavier “Damocles sword” hanging over Xilinmen.

Looking back at Xilinmen’s recent performance, in 2024, the company’s revenue was 1.25B yuan, a slight increase of 0.59%, but net profit attributable to the parent was only 322 million yuan, a sharp decline of 24.84%. Operating cash flow also dropped from 1.253 billion yuan to 787 million yuan, a decrease of 37.23%. While core business remains operational, internal governance cracks have extended into financial performance. Now, with the added issues of controlling shareholder draining, CSRC case filing, and judicial freezing, the challenges are formidable.

From a broader perspective, Xilinmen’s experience is not unique, but the speed of regulatory response has set a new record. The 2024 new “Guo Jiu Tiao” (National Nine Articles) and its supporting measures explicitly call for “promoting the investment value of listed companies,” strengthening cash dividend regulation, linking dividends with share reductions, and implementing ST arrangements for underperforming dividends. Meanwhile, regulators are intensifying crackdowns on fund occupation, illegal guarantees, and information disclosure violations. Since the beginning of the year, several listed companies have been subject to risk warnings or investigations due to controlling shareholder fund occupation. But the case of Xilinmen, from problem exposure to case filing in just five days, remains extremely rare.

The “tightening” of regulatory controls is accelerating at an unprecedented pace. Any attempt to encroach on listed company interests through complex arrangements will face increasingly severe accountability. The regulatory “combo” formed by the March 27 work letter and the April 1 case filing sends a clear signal: regulators will not delay in cracking down on behaviors that harm listed companies.

For Xilinmen, this crisis triggered by the regulatory work letter and escalated by case filing is both a painful “family shame” and a survival test. The company’s decision to sue its controlling shareholder is rare in A-share history and, to some extent, reflects management’s determination to cut ties with problematic shareholders and protect the company’s interests under regulatory pressure. But the reality remains: repaying 190 million yuan of occupied funds within one month is no easy feat. Whether the audit report risks can be mitigated remains an open question.