(Yicai) June 5 -- Shares of Yuyue Medical Equipment and Supply slumped after the owners of the Chinese maker of medical equipment were brought under the spotlight for their suspected involvement in a recent corruption case of Yunnan Baiyao Group, a seller of traditional Chinese medicine.

Yueyue Medical [SHE: 002233] closed 5.7 percent lower at CNY39.43 (USD5) in Shenzhen today.

Meanwhile, Baiyao [SHE: 000538] edged down 0.2 percent to CNY53.77.

Wu Guangming and his son Wu Qun who control Danyang-based Yuyue are not allowed to exit the country even though the probe is finished, news outlet Jiemian reported today, citing people familiar with the matter.

The companies and their owners are linked as Yuyue Science and Technology Development, a major shareholder of Yuyue Medical, is controlled by Wu Guangming and Wu Qun. Yuyue Science participated in a mixed-ownership reform of Baiyao.

In early May, the Economic Observer reported that Kunming-based Baiyao's former chairman Wang Minghui and four other people were under investigation. Later, the newspaper added that Chen Fashu, the actual controller of Baiyao's second-biggest shareholder New Huadu Industrial Group, was taken away by authorities in the second half of last year.

Jiemian recently learned from people familiar with the matter that Chen is still under investigation while the probe of his son Chen Yanhui is concluded but he is still not allowed to leave the country.

Baiyao has only shed light on the circumstances by saying that ex-chairman Wang Minghui and two directors, Chen Fashu and his son Chen Yanhui, resigned due to personal reasons.

However, National Business Daily reported earlier it is possible that the three above-mentioned executives are under investigation due to a loss of state-owned assets when Baiyao acquired Ban Loong Holdings.

In November 2021, Baiyao announced it offered HKD1.3 billion (USD166.4 million) to acquire Hong Kong-listed Ban Loong to enter the field of industrial hemp to enhance its international business while taking advantage of the target company's products and sales channels.

However, the deal brought huge losses to Baiyao as in 2022, it wrote off CNY579 million (USD79.9 million) in goodwill impairment due to the poor investment decision.

As of March 31, New Huadu held 24.4 percent of Baiyao's equity. Yuyue Science, once the fourth-biggest shareholder of Baiyao, had nearly 6 percent, falling out of the top 10 after several rounds of stock sales.

Editor: Emmi Laine