SMCP Hit With €1.7M Fine for Former Chinese Shareholders’ Concealment of Stakes

Smcp opens a new chapter in its governance crisis. The Autorité des marchés financiers (AMF), the French stock market regulator, has imposed a penalty of 1.7 million euros on the Chinese shareholders of the French fashion group for serious breaches of their reporting obligations and for having disseminated data considered to be false or misleading.

The fines are divided between European TopSoho (400,000 euros), Dynamic Treasure Group (300,000 euros) and Chenran Qiu, daughter of the founder of Chinese holding company Shandong Ruyi, who was fined 1 million euros, the AFM said in a statement. The body considers that the three operated in an opaque manner and in contradiction with French stock exchange regulations, in violation of the obligation of transparency in shareholdings.

Smcp's shareholding conflict has been dragging on since 2021, when the Luxembourg investment vehicle European TopSoho, controlled by Shandong Ruyi, defaulted on its financial obligations. As a result, 29% of the company's capital passed into the hands of a consortium of creditors grouped in Glas, which has expressed its intention to divest.

However, a previous operation carried out by European TopSoho has further complicated the situation: the transfer, for a symbolic euro, of 16% of Smcp's capital to Chenran Qiu, through the Dynamic Treasure Group trust, registered in the British Virgin Islands. This transfer of 12 million shares is still not properly declared, and Smcp's own board has acknowledged that it does not know who the beneficial owner of this block is.

The group's shareholders have been accused of manipulation of information and miscommunication.

According to the statement, the three sanctioned players "failed to comply with their reporting obligations" by failing to properly notify, or doing so late, the crossing of significant thresholds of shareholding and voting rights.

In addition, European TopSoho engaged in "market manipulation" by communicating that Chenran Qiu was not a shareholder of Dynamic Treasure Group and had no control over its management, a statement that the regulator considers "false or misleading".

The opacity surrounding Smcp's shareholding structure has generated concern among investors, hindering possible sale processes and detracting from the stability of a group that, after its IPO in 2017, has gone through a phase of operational slowdown and internal tensions.

The Smcp group itself, owner of brands such as Sandro, Maje, Claudie Pierlot and Fursac, has also been sanctioned, albeit for a fault of a different nature. The AMF fined it €20,000 for failing to keep confidential inside information during the course of the corporate dispute.

Since its debut on the stock exchange, Smcp has operated with an unstable shareholding structure. The entry of Shandong Ruyi was a bid for international expansion, but the Chinese group's liquidity problems and its inability to meet its obligations have led to fragmented and disputed control.

In the first quarter of the year, the French group posted a turnover of 296.6 million euros, up 2.6% on the same period of the previous year. This evolution was driven by its positive performance in Europe and the United States.