Following the China Natural Gas CEO announcement that he along with a consortium intends to formulate a proposal to acquire all of the outstanding shares of common stock of China Natural Gas at $4.25 an investigation was initiated on behalf of investors of China Natural Gas, Inc. (NASDAQ:CHNG) concerning whether the offer and the sale process are unfair to investors of China Natural Gas (CHNG) and whether certain of its officers and directors or others breached their fiduciary duties owed investors in NASDAQ: CHNG shares.

The investigation by a law firm concerns whether the China Natural Gas, certain of its officers and directors, and/or others breached their fiduciary duties owed to China Natural Gas, Inc. (NASDAQ: CHNG) investors in connection with the proposed acquisition.

On June 30, 2011Mr. Qinan Ji, Chairman and Chief Executive Officer of China Natural Gas, Inc. (NASDAQ:CHNG) announced he has entered into an exclusivity agreement with a consortium backed by Themes Investment partners. Mr. Ji informed the special committee of the board of directors that he intends to work together with the consortium to formulate a proposal to acquire all of the outstanding shares of common stock of China Natural Gas that he and his affiliates do not already own at a proposed price of $4.25 per share in cash.
Mr. Ji, directly and indirectly, currently beneficially owns approximately 13.99% of China Natural Gas common stock.

Following the announcement shares of China Natural Gas (CHNG) rose from roughly $3.50 to $3.92 on Thursday.

However, CHNG stock traded as early as April 6, 2011 as high as$5.92 and on March 22 as high as $6.20 per share, thus well above the $4.25 offer. Additionally during 2010 CHNG stock traded as high as $12.33 per share.

Furthermore, China Natural Gas reported a substantial increase in its annual Total Revenue from $35.39million in 2007 to $89.95million in 2010. It reported over the same time frame an increase in its Net Income from $9.12million to $17.22million. For the first quarter in 2011 China Natural Gas, Inc. reported an increased first quarter Revenue of $24.11million compared to $19.37million one year earlier.

Therefore the investigation monitors the proposed transaction and concerns whether the China Natural Gas Board of Directors will undertake an adequate and fair sales process to obtain fair and maximized consideration for all shareholders of the China Natural Gas, Inc. (NASDAQ: CHNG) and in particular breach their fiduciary duties to the China Natural Gas (CHNG) shareholder by failing to adequately shop the Company before entering into the transaction.

Mr. Ji, directly and indirectly, currently beneficially owns approximately 13.99% of China Natural Gas common stock.

The investigation concerns also whether China Natural Gas CEO and the consortium would underpay for NASDAQ:CHNG shares, thus unlawfully harming China Natural Gas (CHNG) stockholders.

A potential securities class action lawsuit would seek to maximize the amount of money and information NASDAQ:CHNG shareholders would receive in a buyout, so the law firm.