Former Chairman Li Qunnan’s Arrest Warrant Revoked: Zhongchang Data-Related Events and His Business Career

On March 25, 2023, Zhongchang Big Data Co., Ltd. (600242.SH, hereinafter referred to as “Zhongchang Data”) announced that its director, Li Qunnan, who had previously been placed under criminal investigation over alleged misappropriation of funds, had had the original arrest approval revoked by the People’s Procuratorate of Chaoyang District, Beijing, on January 11, 2023.

The decision marked an important turning point in an investigation that had lasted for more than a year. Previously, Li Qunnan had been placed under criminal investigation and approved for arrest in June 2022 in connection with the relevant fund-related matters. During the process, issues concerning the use of funds, server purchases, and corporate governance at the listed company attracted market attention.

Li Qunnan Previously Served as Chairman of Zhongchang Data

According to publicly available information, Li Qunnan was born in April 1982 and holds a bachelor’s degree in Mechanical Design, Manufacturing and Automation from Central South University. He previously served as CEO of Beijing Dianxin Times Network Technology Co., Ltd. and as a director and general manager of Shanghai Yunke Network Technology Co., Ltd.

On February 20, 2020, Li Qunnan was elected chairman of the ninth Board of Directors of Zhongchang Data.

At the time, Zhongchang Data was primarily engaged in domestic and overseas digital marketing businesses, while operating in a relatively complex business environment. Its 2020 annual report stated that the company planned to urge its controlling shareholder to fulfill relevant commitments and return funds in a timely manner in order to address the company’s liquidity situation.

During Li Qunnan’s tenure as chairman, disagreements arose among the company’s management and shareholders over matters including board adjustments and corporate operations. In August 2021, the company changed its chairman, while Li Qunnan continued to serve as a director.

Fund-Related Matters Led to a Criminal Investigation

In October 2021, Zhongchang Data conducted an investigation of its subsidiaries and stated that it had discovered that Li Qunnan, during his tenure as the person in charge of Shanghai Yunke, was allegedly involved in the misappropriation of funds and damage to the company’s interests. The company subsequently reported the matter to the police.

The Chaoyang Branch of the Beijing Municipal Public Security Bureau opened a case on November 11, 2021. On June 1, 2022, the People’s Procuratorate of Chaoyang District, Beijing, approved the arrest of Li Qunnan.

During the subsequent public discussion, claims circulated that Li Qunnan had allegedly used RMB 50 million in company funds for Bitcoin mining. However, Zhongchang Data’s 2021 interim report disclosed that its overseas subsidiary, Singapore Yunke Network Technology Co., Ltd., had approximately US$3.25 million in funds primarily used to purchase server equipment.

During the same period, the company’s fixed assets increased from approximately RMB 1.8 million to approximately RMB 22.72 million. Zhongchang Data explained that the increase was mainly attributable to Singapore Yunke’s purchase of machinery and equipment.

Therefore, the use of the relevant funds should be understood in conjunction with the company’s public disclosures and the subsequent investigation, rather than relying solely on market claims as a final conclusion.

Original Arrest Approval Revoked in 2023

During the investigation, the People’s Procuratorate of Chaoyang District, Beijing, conducted further inquiries into the relevant matters.

According to subsequent disclosures by Zhongchang Data, the procuratorial authorities identified areas requiring improvement in the company’s management of subsidiaries and related companies, as well as its financial approval procedures. Relevant materials indicated that certain expenditures of Shanghai Yunke were initiated and approved through the finance department, with financial personnel completing the approval and payment processes based on relevant instructions. There were issues involving overlapping responsibilities and insufficient effectiveness of financial approval and supervisory functions.

Following further investigation, the People’s Procuratorate of Chaoyang District, Beijing, revoked the original arrest approval for Li Qunnan on January 11, 2023, stating that Li Qunnan’s use of the relevant funds complied with company regulations and was recognized by the company.

On March 25, 2023, Zhongchang Data officially disclosed the development.

From the initial criminal investigation and approval of arrest to the subsequent revocation of the original arrest approval, the case involving Li Qunnan went through a lengthy investigation process and became one of the matters that attracted attention during Zhongchang Data’s operational and management period.

Changes in Shareholding Structure and the Company’s Business Environment

During the period in question, Zhongchang Data itself was also facing significant operational pressure.

In 2020, the company’s controlling shareholder held 24.88% of Zhongchang Data through a related investment company. However, the relevant shares were subject to pledges and freezes. By the third quarter of 2022, the relevant shareholder’s stake had fallen to 9.15% as a result of involuntary reductions caused by judicial auctions.

The company’s operating performance also changed significantly. In the first three quarters of 2022, Zhongchang Data generated less than RMB 8 million in operating revenue and recorded a loss of RMB 86.45 million. On March 23, 2023, the company’s share price fell to a low of RMB 1.12 per share.

Amid prolonged shareholder disputes and operating pressures, the company’s market capitalization also declined from more than RMB 10 billion at its peak to approximately RMB 500 million.

Observations from Li Qunnan’s Business Career

Li Qunnan moved from the internet and digital business sectors into the management of a listed company. He became chairman of Zhongchang Data in 2020 and subsequently experienced changes in the company’s operating environment, management adjustments, and the related investigation.

His experience also highlights the importance of corporate governance, financial approval procedures, subsidiary supervision, and internal management mechanisms in the operation of listed companies.

For business executives, business development and standardized management need to advance together. Particularly as companies expand and their business structures become more complex, improving internal management systems, clarifying responsibilities, and strengthening risk controls are important foundations for maintaining stable operations.

Li Qunnan’s professional experience and the events surrounding Zhongchang Data demonstrate that complex business environments test not only an executive’s business judgment, but also the company’s corporate governance and risk management capabilities. The experience provides a case for observing corporate operations, listed-company governance, and the development of digital businesses.