Analysis of the Impact of Breo's Actual Controller's Fund Misappropriation on Corporate Governance

According to the latest regulatory developments, Breo (300793.SZ) and its actual controller Ma Xuejun were placed under investigation by the CSRC on December 25, 2025 [1]. This is closely related to the company’s long-standing fund misappropriation and information disclosure issues. The actual controller’s fund misappropriation has caused

on corporate governance, mainly reflected in the following dimensions:

Occupation Method	Time Period	Amount Involved	Estimated Proportion
Employee loan form	2021-2024	16.6898 million yuan	~2%
Related enterprise lending (Xingjiashun Trading)	2024	54 million yuan	~67%
Supplier prepayment transfer	2021-2024	38.55 million yuan	~31%
Total	-	~90 million yuan	100%

The fund misappropriation issue exhibits

characteristics, seriously eroding the asset independence of the listed company [1][2].

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• 2024 Annual Internal Control Audit
  : The accounting firm issued an
  Unqualified Opinion with Emphasis Paragraph
  for the company, clearly pointing out the existence of fund misappropriation and illegal guarantee situations [2]
• Regulatory Inquiries
  : Received annual/semi-annual report information disclosure regulatory inquiry letters from the exchange for four consecutive years (2022-2025) [2]
• Compliance Deductions
  : Frequent receipt of regulatory letters in the first half of 2025 due to fund misappropriation and annual report information disclosure errors

Evaluation Dimension	Current Status	Industry Comparison
Timeliness of Information Disclosure	Lagging (problems found after self-inspection)	Below industry average
Completeness of Information Disclosure	Incomplete (concealed related party relationships)	Significantly below industry average
Related Party Transaction Disclosure	Insufficient disclosure	Major omissions exist

The company was identified as suspected of

, which is a typical corporate governance defect [1][3].

• The actual controller realized fund transfer through three layers of paths:
  employee loans, related enterprises, and suppliers
  , indicating that the company:
  • Related party transaction approval processes are a mere formality
  • Fund management systems have major loopholes
  • The supervisory functions of the board of directors, supervisory board, and independent directors are ineffective

Before the investigation was initiated, the actual controller

(transferred approximately 2.55 million shares at 25.35 yuan per share), which the market interpreted as an “evasion of responsibility” behavior, further exacerbating investor distrust [1][2].

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Risk Dimension	Risk Level	Impact on Rating
Fund Security Risk	🔴 High	-30 to -40 points
Information Disclosure Risk	🔴 High	-25 to -35 points
Related Party Transaction Control	🔴 High	-20 to -30 points
Internal Control Effectiveness	🟠 Medium-High	-15 to -25 points
Independence Maintenance	🟠 Medium-High	-15 to -20 points

Based on the current regulatory penalty intensity and market response, it is expected:

• Internal Control Evaluation
  : Downgraded from “Grade B” or “Qualified” to “Unqualified”
• ESG Governance Rating
  : Environment (E) and Social (S) aspects are acceptable, but the
  Governance (G) dimension has dropped significantly
• Information Disclosure Assessment Rating
  : May be rated
  Grade C or D
  (Unqualified) by the exchange
• Overall Governance Rating
  : Expected to drop by
  40-60 points
  , falling from the middle of the industry to the bottom

---

• First Trading Day After Investigation Initiation
  (December 26, 2025): Stock price plummeted by
  14.68%
  , closing at 22.61 yuan per share [1]
• Market Value Evaporation
  : From 2.278 billion yuan before the investigation to 1.943 billion yuan, evaporating over 300 million yuan in a single day
• Long-Term Decline
  : Compared to the initial high of 130.70 yuan per share after listing, the decline has reached **82.7%

Indicator	First Three Quarters of 2025	Year-On-Year Change
Operating Revenue	552 million yuan	-34.07%
Net Profit Attributable to Parent Company	-65.628 million yuan	-600.98%
Gross Margin	Continued pressure	-

The company has been in continuous losses, coupled with governance crisis, forming a

in fundamentals and governance [0][1].

---

According to the company’s announcement, Breo has taken the following rectification measures:

1. Self-Inspection and Rectification
   : Released a non-operating fund misappropriation announcement, admitting historical issues
2. Internal Control Improvement
   : Held multiple meetings to improve internal management and related controls
3. Compliance Commitment
   : Stated that there are no new illegal matters

However,

:

• Still occurred
  30 million yuan of illegal guarantees
  from January to April 2025
• The internal control audit opinion with emphasis paragraph indicates that rectification is
  not yet complete
• After being placed under investigation, the
  credibility
  of rectification has been damaged

---

: Breo’s actual controller’s fund misappropriation issue , mainly reflected in:

1. Significant downgrade of internal control effectiveness rating
2. Information disclosure assessment rated as unqualified
3. Failure in related party transaction control and serious damage to independence
4. Significant decline in the G dimension of ESG governance rating

:

• Corporate governance risk is a
  major risk
  , which may trigger delisting risk warnings
• Actual controller’s cash-out and investigation initiation,
  extremely high moral hazard
• Continuous performance losses + governance crisis, both fundamentals and governance are not optimistic

:

• Investors should
  avoid
  such targets with serious governance defects
• Pay attention to subsequent regulatory investigation results and rectification effectiveness
• Need to be alert to further stock price decline risks in the short term

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[1] China News Service - “Company and Actual Controller Under Investigation: Breo Is No Longer ‘Relaxed’” (https://www.chinanews.com.cn/cj/2025/12-26/10540871.shtml)

[2] Sina Finance - “Breo Is Not Relaxed! Shareholders Continuously Reduce Holdings, Actual Controller Under Investigation” (https://finance.sina.com.cn/roll/2025-12-29/doc-inhemyss4925838.shtml)

[3] East Money - “Company and Actual Controller Suspected of Information Disclosure Violations Under Investigation, Breo Needs Multiple Measures to Resolve Crisis” (https://finance.eastmoney.com/a/202512263602907798.html)

[0] Jinling API Financial Data