Langkun Technology divorce leaves Chen Jianxiang as sole controller

Langkun Technology's controlling shareholder Chen Jianxiang will transfer 5.2 million shares worth about 129 million yuan (about $18 million) to his ex-wife Zhang Liyin, leaving him as sole controller of the Shenzhen-listed company.

The biodiesel and waste-recycling firm disclosed the divorce settlement on the evening of Oct 12, as Chinese regulators scrutinise share splits by listed-company shareholders for signs of disguised cash-outs. A concert party agreement keeps Zhang's voting rights in Chen's hands.

What changes hands

Chen will move the 5.2 million shares to Zhang through a non-trading transfer, valued at the Oct 12 closing price. After the transfer, his direct stake falls to 4.30% from 6.45%, while hers rises to 8.47% from 6.32%.

The company's controller is now listed as Chen alone rather than Chen and Zhang jointly. Zhang becomes a concert party. Langkun Technology said control has not changed in substance.

Indirect holdings keep Chen in charge

Chen also holds shares through Shenzhen Langkun Investment and other platforms, according to corporate records database Tianyancha. His combined direct and indirect voting rights remain above 22%.

Shenzhen Langkun Technology Co Ltd was founded in 2001 with registered capital of about 242 million yuan (about $34 million) and listed on the ChiNext board of the Shenzhen Stock Exchange in 2023. Chen is its legal representative.

Under the new concert party agreement, which runs for the full holding period, Zhang undertakes to vote, propose and nominate in line with Chen at all shareholder meetings. The arrangement converts what was a two-person controlling bloc into single-handed control.

Why the deal was built this way

Regulatory limits on divorce-related sales

Rules on share reductions by major shareholders treat divorced couples as one holder. Their sale quotas are combined, and both must follow pre-disclosure and percentage limits.

For a ChiNext company listed only a year ago, moves by original shareholders around the expiry of lock-ups draw close exchange scrutiny. Zhang cannot sell freely on the secondary market despite holding shares worth 129 million yuan.

Concessions depend on stable ownership

Langkun Technology treats food waste, kitchen waste and animal waste to produce biodiesel, bioenergy and green power. Its plants run under build-operate-transfer and build-own-operate models.

Those projects require concession agreements with local government departments that can run for a decade or several decades. Bidding and syndicated bank credit place a premium on a stable core team. A prolonged marital dispute, or a court freeze on a major shareholder's direct stake, could raise doubts about the company's ability to honour its concessions and trigger lender risk alerts.

By settling with 5.2 million shares, Chen gave up part of his direct economic interest to secure Zhang's full support on voting. The company's standing as a concession operator is preserved.

From family pair to one voice

Joint control by a married couple is typical of family-founded firms. As such a company lists and moves into higher-end biotech, decision-making needs to be more concentrated.

Two controllers can turn private emotions into drawn-out governance deadlock when facing strategic shifts, cross-border capital deals or risky technology bets. Naming Chen as sole controller removes that risk, the company argues, and lets it respond quickly to swings in commodity prices and to overseas anti-circumvention probes into biodiesel.

Risks ahead

The first is the mismatch between shareholding and control. Zhang is now the largest direct natural-person shareholder at 8.47%. If the concert party agreement is disrupted, or if she faces personal debt claims, a large share pledge or forced judicial execution could unsettle the stock.

The second is protecting the market value against weaker earnings. Biodiesel producers face overseas tariff barriers, European anti-dumping investigations and volatile prices for waste cooking oil feedstock at home.

A wholly owned subsidiary also had to pay back more than 20 million yuan (about $2.8 million) in tax, weighing on results for the period. Turning its enzyme process and industrial-grade mixed oil exports into reliable profit growth is now the test for Chen.

What to watch

Tianyancha records the 242 million yuan of registered capital and the change of controller — the latest rebalancing of power at an environmental technology company that started in Bao'an district, Shenzhen.

Chen has ended his marriage with a nine-figure share transfer and secured control through a concert party agreement. Whether the ChiNext company can now steer through an industry revaluation and tough overseas bioenergy trade conditions under one hand is the question investors will judge.