(Yicai Global) March 24 -- Shares of Vantone Neo Development Group plunged following reports that the Chinese property developer’s controlling shareholder was under police investigation for allegedly relending money at unreasonably high rates of interest.

Vantone [SHA: 600246] closed 8.6 percent lower today at CNY6.20 (95 US cents), after earlier slumping by as much as the exchange-imposed limit of 10 percent. The benchmark Shanghai Composite Index fell 1.3 percent.

The Beijing-based company yesterday denied the claims, stating that its controlling shareholder, Ka Wah Oriental Holding Group, has not received any notice of an investigation from the public security agency. The agency opened an investigation into Ka Wah several days ago, Securities Times reported yesterday.

But according to Vantone, Ka Wah filed a lawsuit with a Beijing court in April 2019 against a firm called Xiangheng over a loan contract dispute. The case is still pending. Vantone said the dispute had no direct relation with the listed company and will not affect Vantone’s controlling rights.

Ka Wah’s board is operating normally and the duties of Wang Yihui, Ka Wah’s actual controller and chairman, will not be impacted, it added. As actual controller and chairman, Wang owns 82 percent of Ka Wah. The firm specializes in property management, real estate brokerage and house property information consulting, according to corporate data platform Tianyancha.

According to Vantone’s previous earnings forecast, the company expects to have achieved net profit of CNY40 million (USD6.2 million) to CNY60 million last year, versus CNY605 million (USD93.0 million) in 2019, because of the Covid-19 pandemic.

Editor: Peter Thomas