Sinopec Shanghai Petrochemical Co Ltd (SPC) has been questioned over its sponsor's alleged violation of rules during SPC shareholding restructuring.

Some minority shareholders have sent letters to newspapers claiming there has been wrongdoing, the Oriental Morning Post said.

They criticized CITIC Securities for its trading of the stocks of SPC. The Shanghai Stock Exchange said CITIC Securities may not be punished severely if it can prove it was ignorant of violating any rules.

"The investment bank business and self-operation business in CITIC Securities have a strict firewall, which prevents each of them knowing the other's business operation,"

Zhou Guoqing, a spokesman from the Shanghai bourse, said. Zhou said they have sent letters to SPC and Zhongxin Jingdian Peizhi Securities to investigate the matter, and is now waiting for feedback.

"It is probably the case that they do not know each other's business, so they will not be punished severely," Zhou added.

CITIC Securities, which is the sponsor of SPC, has 49 per cent of the shares of CITIC Fund Management Co Ltd. CITIC Fund is the management company of Zhongxin Jingdian Peizhi Securities Investment Fund.

According to data released on October 30 by SPC, Zhongxin Jingdian is its eighth biggest circulating shareholder.

Sponsors and their relevant institutions should not trade the stocks of their sponsored listed company, according to rules stipulated by Shanghai Stock Exchange in September last year.

The relevant party is defined as sponsors' holding companies, according to Zhou. Sponsors guilty of breaking rules will face open public criticism, advised to change sponsors by Shanghai Stock Exchange and, if in serious breach, be reported to the China Securities Regulatory Commission.

"We believe CITIC Securities must know the risks and will handle the matter properly," said Zhang Jingming, secretary of SPC's board of directors.

The shareholding restructuring meeting was convened last Wednesday. The restructuring proposal has still not been ratified because it has not been approved by more than two-thirds of the shareholders with valid voting rights.

SPC is one of the largest modern petrochemical enterprises in China with highly integrated production and operations of petroleum products, petrochemicals, synthetic fibres and plastics.

CITIC Fund is jointly owned by CITIC Securities Co Ltd, the State Development and Investment Corp, Shanghai Jiushi Corp and Zhonghai Trust and Investment Co Ltd.