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TIAN RUIXIANG Holdings Ltd Faces Share Freezing: Key Insights from January 2025 Report

$TIRX
Form 6-K
Filed on: 2025-01-02
Source
TIAN RUIXIANG Holdings Ltd Faces Share Freezing: Key Insights from January 2025 Report

Here are the key insights and important information extracted from the provided section of the financial report (Form 6-K) for TIAN RUIXIANG Holdings Ltd:

  1. Company Overview:
  • Name: TIAN RUIXIANG Holdings Ltd
  • Incorporation: The company is incorporated under the laws of the Cayman Islands.
  • Address: Room 918, Jingding Building, Xicheng District, Beijing, The People’s Republic of China.
  1. Report Date: This report is dated January 2, 2025, and pertains to events in December 2024.
  2. Judicial Freezing of Shares:
  • On December 13, 2024, the company learned that all equity shares of its variable interest entity (VIE), Zhejiang Tianruixiang Insurance Broker Co. Ltd. (TRX ZJ), owned by its sole shareholder, WDZG Consulting, have been judicially frozen since May 4, 2023, due to debts owed by WDZG Consulting.
  • The judicial freezing was not timely communicated to TIAN RUIXIANG by WDZG Consulting.
  1. Ownership Structure:
  • TIAN RUIXIANG does not own any equity interest in TRX ZJ but controls it through contractual arrangements (VIE Agreements).
  • The VIE Agreements were established on May 20, 2019, to ensure that TRX ZJ operates for the benefit of TIAN RUIXIANG.
  1. Risks and Implications:
  • The judicial freezing allows any of WDZG Consulting's 18 creditors to auction the equity shares of TRX ZJ, which could lead to TIAN RUIXIANG losing control over TRX ZJ.
  • If a third party acquires the shares, the VIE Agreements would terminate, jeopardizing TIAN RUIXIANG’s business operations and potentially leading to a substantial decline in the value of its securities.
  1. Management's Response:
  • The management plans to monitor the situation closely and intends to participate in any potential auctions to acquire the equity shares of TRX ZJ, aiming to maintain control through direct ownership.
  1. Current Status:
  • As of the report date, the freezing has not affected TRX ZJ's business activities, and the VIE agreements remain valid.
  • TRX ZJ possesses significant assets, including permits and intellectual property rights, which are critical for the company's operations.
  1. Legal Counsel: The company is advised by Yuan Tai Law Office regarding the legal implications of the freezing and the status of the VIE agreements.
  2. Management:
  • The report is signed by Sheng Xu, the Chief Executive Officer of TIAN RUIXIANG Holdings Ltd.

This analysis highlights significant legal and operational risks facing TIAN RUIXIANG Holdings Ltd, particularly concerning its VIE structure and the implications of the judicial freezing of shares. The management's proactive approach to monitoring and possibly participating in the auction process is crucial for maintaining control over its operations.