Exchange’s Disciplinary Action against FingerTango Inc. (Stock Code: 6860) and Eight Former Directors

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 Stock Exchange of Hong Kong Limited

CENSURES:
1. FingerTango Inc. (Stock Code: 6860);

IMPOSES:
A DIRECTOR UNSUITABILITY STATEMENT and CENSURE against:
2. Mr Liu Zhanxi, former executive director and chief financial officer;
3. Mr Wang Zaicheng, former executive director and joint company secretary;
4. Mr Wu Junjie, former executive director;
5. Ms Yao Minru, former independent non-executive director;

A PREJUDICE TO INVESTORS’ INTERESTS STATEMENT and CENSURE against:
6. Mr Liu Jie, former executive director, chairman and chief executive officer;

CRITICISES:
7. Mr Zhu Yanbin, former executive director;
8. Mr Guo Jingdou, former independent non-executive director; and
9. Dr Liu Jianhua, former independent non-executive director;

DIRECTS:
Mr Zhu Yanbin, Mr Guo Jingdou and Dr Liu Jianhua to attend training,

AND FURTHER DIRECTS:
that the listing of the Company's shares be cancelled under Rule 2A.10A(2)(b) if any of Mr Liu Jie and Mr Wu Junjie occupies a position as director or within senior management of the Company and/or its subsidiaries upon the expiry of 14 days from the date of the Statement of Disciplinary Action.

The Director Unsuitability Statement is a statement that, in the Exchange’s opinion, Mr Liu Zhanxi, Mr Wang Zaicheng, Mr Wu Junjie and Ms Yao Minru are unsuitable to occupy a position as director or within senior management of the Company or any of its subsidiaries.

The Prejudice to Investors’ Interests Statement is a statement that, in the Exchange’s opinion, the occupying of the position of director or senior management of the Company or any of its subsidiaries by Mr Liu Jie may cause prejudice to the interests of investors.

The Exchange found the following:

(a) Two business days after its IPO listing in July 2018, the Company used 46% of its net listing proceeds to subscribe for an unlisted wealth management product.  This was a material deviation of the intended use of the listing proceeds as stated in its prospectus.  In breach of the Listing Rules,

• the Company failed to disclose the intended use of the listing proceeds for such subscription and/or the change in use of the listing proceeds in its prospectus, allotment results announcement and relevant annual and interim reports.  It also failed to consult its compliance adviser before entering into the subscription; and
• Mr Liu Jie, Mr Liu Zhanxi and Mr Wang Zaicheng failed to discharge their director’s duties to procure the Company’s compliance with the said requirements under the Listing Rules.

(b) Between 2018 and 2021, the Company granted and/or extended 22 loans totalling approximately RMB426.5 million.  A large majority of the loans were unsecured.  There were no adequate and effective internal controls to govern the money lending activities, nor was there proper oversight over such activities at the board level until after a majority of the loans had defaulted.  The loans were granted in the absence of (i) adequate due diligence and/or credit assessment on the borrowers and/or their guarantors and collateral (if any), and (ii) proper assessment of the enforceability of the security or guarantee provided.  Around 84% of the total loan receivables were impaired in the financial statements for the years ended 31 December 2021 and 2022.  In breach of the Listing Rules,

• the Company failed to announce a number of loans which constituted discloseable transactions under the Listing Rules;
• the directors identified in (2), (3) and (5) to (9) above failed to discharge their director’s duties to take sufficient steps to protect the Company’s interests, including putting in place adequate and effective internal controls for the money lending activities; and
• Mr Liu Jie, Mr Liu Zhanxi and Mr Wang Zaicheng also failed to exercise reasonable skill, care and diligence in conducting, supervising and/or monitoring the money lending activities and in managing the Company’s funds.  They also failed to use their best endeavours to procure the Company’s compliance with the Listing Rules.

In addition, four directors, namely Mr Liu Zhanxi, Mr Wang Zaicheng, Mr Wu Junjie and Ms Yao Minru, were found to have failed to cooperate in the Exchange’s investigation.

Ends