What happened: On Tuesday night, the management division of the Shenzhen Stock Exchange’s ChiNext board sent a letter of inquiry to Leshi Internet, or Le.com. The Stock Exchange requested that the video-streaming platform explain various details of its latest board election as well as transactions for this year, submitting a written reply by this Friday. Leshi’s most recent board election took place this past Monday, October 15. Among other things, ChiNext management asked how the new electees were chosen, and whether or not Leshi’s second-biggest shareholder, Sunac’s Tianjin Jiarui, had control in deciding at least half of the board’s members. The stock exchange division also required that debt-laden Leshi explain whether control of the company has changed and if any of its day-to-day transactions this year haven’t passed proper reviewing procedures.
Why it’s important: This is not the first time the Shenzhen Stock Exchange has questioned Leshi on its decisions. This past July, the exchange asked whether blockchain-related marketing surrounding its subsidiary’s “One-chain Box” device might not be a ploy to raise its stock prices. Not long after that, Leshi released a statement forecasting hefty net losses in the first half of this year and the possibility of being suspended from the Shenzhen Stock Exchange if the trend continued. Real estate developer Sunac has proven a lifeline in the past for both Leshi and its troubled parent company LeEco, but ultimately may not be able to rescue the debt-ridden subsidiary.