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Exchange’s Disciplinary Action against Longrun Tea Group Company Limited (stock code: 2898) and Its Current Directors

Regulatory
14 Jul 2021

香港联合交易所有限公司
(香港交易及结算所有限公司全资附属公司)
THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)

 

The Listing Review Committee of The Stock Exchange of Hong Kong Limited

CENSURES:

(1) Longrun Tea Group Company Limited (Stock Code: 2898) (Company); 
(2) Dr Chiu Ka Leung (Dr Chiu), executive director and Chairman;
(3) Mr Jiao Shaoliang (Mr Jiao), executive director;
(4) Ms Yeh Shu Ping (Ms Yeh), executive director, Vice-chairman and Chief Executive Officer;
(5) Dr He William (also known as Lu Pingguo) (Dr He), executive director;
(6) Mr Guo Guoqing (Mr Guo), independent non-executive director;
(7) Mr Kwok Hok Lun (Mr Kwok), independent non-executive director;
(8) Mr Lam Siu Hung (Mr Lam), independent non-executive director;
(9) Dr Liu Zhonghua (Dr Liu), independent non-executive director.

AND FURTHER STATES:

In the Exchange’s opinion, by reason of Dr Chiu’s and Mr Jiao’s persistent and/or wilful failure to discharge their responsibilities under the Listing Rules, the retention of office by Dr Chiu and Mr Jiao is prejudicial to the interests of investors.

 

The Exchange found that the Company has failed to comply with various disclosure and approval requirements in connection with a loan arrangement, under which over RMB137 million was advanced to a connected entity owned by Dr Chiu and Mr Jiao. Amongst other things, the Exchange also made findings of inaccuracy and delay in relation to the Company’s financial results.

Dr Chiu and Mr Jiao were found to have failed to discharge their director’s duties and undertakings in failing to act honestly and in good faith in the interests of the Company as a whole, act for proper purpose, avoid actual and potential conflicts of interest and duty, disclose fully and fairly their interests in the loan agreement and apply such degree of skill, care and diligence as may reasonably be expected to comply with the Rules to the best of their ability and to use their best endeavours to procure the Company’s compliance with the Rules.

All the above directors have failed to discharge their director’s duties and undertakings to comply with the Rules to the best of their ability and to use their best endeavours to address the Company’s auditors’ concerns and/or avoid the disclaimers and to ensure the Company had adequate and effective internal controls to procure the Company’s compliance with the Rules.

 

Key Messages:

The Listing Rules are designed to protect investors in relation to actual or perceived conflicts of interest. It is important that issuers publish accurate and complete financial information in a timely manner, and comply with the notifiable and connected transaction requirements under the Listing Rules. Failure to do so can destroy transparency and confidence in the market.

It is imperative for issuers and directors to ensure that adequate and effective internal controls are implemented and maintained for procuring compliance with the Listing Rules and for protecting the interests of issuers and shareholders. 

Directors must act honestly, for proper purpose and in good faith in the issuer’s interests, and also follow up anything untoward that comes to their attention.

 
A copy of the Statement of Disciplinary Action is available on the HKEX website.
 
 

 

 

Ends

Updated 14 Jul 2021