(Yicai Global) Aug. 5 -- Shares of Eastern Gold Jade, a Chinese jewelry business being investigated by regulators, gained by the maximum allowed today after the company said its chairman has stepped down for health reasons.

The Shenzhen-based company's shares [SHA:600086] surged 10 percent to close at CNY3.56 (51 US cents) each, after falling at the market open. Despite the rally, the stock is still only worth half of what it was in March.

Eastern Gold Jade on Feb. 2 reported a substantial full-year loss for 2018 because of a broken capital chain, for which Zhao Ning, 38, resigned as chairman. On March 6, he returned to the role and Eastern Gold Jade said Zhao and other shareholders planned to transfer their stakes in Eastern Gold Jade's largest shareholder, Yunnan Xinglong Industrial, to China Lantian, which would become the jeweler's de facto controller.

The transaction grabbed market attention. On Feb. 12, Eastern Gold Jade suspended the equity transfer on the grounds that China Lantian had not provided supporting evidence for the acquisition's legal compliance. On July 20, the China Securities Regulatory Commission began a probe into Zhao and staff at China Lantian on suspicion of illegal information disclosure.

China Lantian is the largest shareholder of Lantian, the first company in China to withdraw from the market due to financial fraud. Zhao has been with Eastern Gold Jade since 2015.