Gelonghui, Feb. 20: Xinming China (02699.HK) issued an announcement. The Stock Exchange condemned: (1) Mr. Chen Chengshou, Executive Director, Chairman and Chief Executive Officer of the Company; (2) Mr. Feng Cizhao, an executive director of the Company; and (3) Ms. Gao Qiaoqin, a non-executive director of the Company. It further ordered that Mr. Chen complete 18 hours of training on regulatory and legal issues and compliance with the Listing Rules within 90 days, including at least 3 hours each on the following topics: (i) directors' duties; and (ii) the Corporate Governance Code (training); and Mr. Feng and Ms. Gao each complete 15 hours of training within 90 days.
The relevant directors agreed to reach a settlement on this disciplinary action. They acknowledge the violations described below and accept the sanctions and instructions imposed on them by the Listing Committee.
This case involved impairment losses on multiple loans obtained by Chongqing Xinming Real Estate Co., Ltd. (Chongqing Xinming), one of the company's subsidiaries.
The Listing Committee ruled that Mr. Chen, Mr. Feng and Ms. Gao failed to handle loan matters with due skill, care and diligence, and that Mr. Chen also failed to avoid actual and potential conflicts of interest and position, in violation of Rule 3.08 of the Listing Rules and its “Directors' Undertaking”: (1) The relevant directors entered into a loan or were aware of the relevant loan, but did not submit the loan to the board of directors for consideration and approval. They failed to ensure that the company's internal control policies were complied with, nor did they have proper documentation to maintain loans. (2) Mr. Chen failed to avoid his conflict of interest as a director of the company and owner of Xinming Group. He did not inform the board of the lender's default interest requirements and agreed to pay default interest without reporting to the board. As a result, the company was unable to take steps to protect its own interests.