Shares of Yunnan Green-Land Biological Technology Co tumbled by the daily cap of 10 percent as soon as the Shanghai stock market opened yesterday morning as investors scurried to dump the company stock following the arrest of its chairman for fabricating facts in the firm's prospectus.
The plunge was another hit for the company, engaged in planting and sale of greening plants, within two trading days. On Friday morning, trading in its shares had to be suspended after a 10 percent plunge when police announced the arrest of its board chairman He Xuekui.
He, the founder of the firm listed on Shenzhen's small and medium enterprises board, resigned from her position on Friday. Police froze all her 43.25 million non-tradable company shares when the probe was launched last December.
The 42-year-old entrepreneur could face up to five years in prison if found guilty, plus a fine ranging from 1 to 5 percent of all her profits from the financial crime, according to China's Criminal Law.
The Yunnan firm has never issued any additional shares after it went public on December 21, 2007.
Since its listing, the firm changed three financial directors, three accounting firms and altered its profit forecast five times between October 2009 and April 2010.
