Investors fret as China’s A-share divorces echo Bezos’ Amazon split

China’s A-share market has seen another high-profile divorce case result in a massive asset split, involving the transfer of 6 billion yuan (US$886 million) – the highest this year – and raising concerns over corporate governance stability and share price fluctuations. Although the scope of the divorce settlement is not at all comparable to that of Jeff Bezos or Bill Gates, it has made tens of thousands of retail investors worry about their portfolio holdings and paper wealth. Maxone Semiconductor Suzhou Co, the first domestic probe card maker listed on Shanghai’s Sci-Tech Innovation Board, said in an exchange filing last week that its president, Zhou Ming, 53, had completed all the legal procedures and divided his shareholdings following his divorce. Zhou transferred half of his personal equity holdings in the company, or 10.86 per cent of the total issued shares, to his ex-wife. Based on calculations after Wednesday’s closing share price, the equity division is worth about 6 billion yuan each. The announcement was made less than one year after the company’s initial public offering in December. Shares of Maxone have jumped nearly threefold since its debut, rising to a record intraday high of 671 yuan per share on July 1. But in line with recent tech stock declines, it had already dropped to 417 yuan per share on Thursday. Zhou’s divorce is just the latest such case reported in China’s A-share market, where retail investors often worry about shares being dumped at high prices following the completion of legal proceedings. “Tech stocks are volatile at this stage, making the share price reaction hard to gauge,” said a retail investor on Xueqiu, a Beijing-based online social and trading platform last week. Fu Yifu, a special research fellow at Su Merchants Bank based in Nanjing, eastern Jiangsu province, said spouses could receive substantial shareholdings after a divorce is finalised. “While share disposals are subject to the China Securities Regulatory Commission (CSRC) and bourse rules, investors still worry about concentrated selling once the shares become tradeable, which could weigh on the stock price,” Fu said. “Retail investors’ concerns stem from a deep distrust of corporate governance stability and past cases. Listed firms need greater transparency and consistency in their disclosures to ease such worries,” he added. Shenzhen-listed Trust & Far Technology, a general contractor for data centre information technology infrastructure services, also reported last week that its founder and largest shareholder Zhan Lixiong, 64, has been sued for divorce by his wife, who is requesting a division of their marital assets. Zhan holds a 20.73 per cent share in the company. The court has accepted the case, but a hearing has not been scheduled yet, and the amount involved is still to be determined, according to a company statement. The lawsuit only concerned the shareholder’s personal rights and would not materially affect the company’s daily operations. It remained uncertain whether actual control would shift, the company added. According to another announcement back in March, Zhan said he planned to offload up to 2.9 per cent of the company’s total shares through centralised bidding and block trades between April 23 and July 22. It was intended to settle his share pledge loans and cover family financial needs. So far, the share reduction plan has not been carried out. Dividing equity through the holdings of the controlling or largest shareholder following a divorce is not an uncommon practice either at home or abroad. Globally, the biggest divorce settlement on record belongs to Jeff Bezos, who parted with Amazon shares worth US$38 billion to his ex-wife MacKenzie Scott in 2019. In China, Zhou Hongyi, founder of US-sanctioned 360 Security Technology, finalised his divorce with Hu Huan in 2023. He transferred 6.25 per cent of his equity stake in the firm to his ex-wife, with the holding valued at nearly 9 billion yuan, according to the company. In 2024, the China Securities Regulatory Commission issued new guidelines on share reduction by major shareholders. The rules closed loopholes that allowed indirect share reduction through divorce, securities lending, derivatives transactions and other ways.