The Securities and Futures Commission (SFC) of Hong Kong is seeking disqualification orders from the Court of First Instance against three former directors of China Longevity Group Company Limited, formerly known as Sijia Group Company Limited, in legal proceedings under section 214 of the Securities and Futures Ordinance (SFO).
The three former directors of China Longevity named in the proceedings are Mr Lin Shengxiong, former Chairman and Executive Director, Mr Zhang Hongwang and Mr Huang Wanneng, both former Executive Directors.
The legal proceedings follow the SFC’s investigation into the overstatements of China Longevity’s cash and cash equivalents balance by about RMB198.9 million and RMB302.4 million as at 31 December 2011 and 30 June 2012, respectively; the overstatements accounted for about 13.6% and 19.9% of China Longevity’s net assets on aforementioned dates.
As a result, China Longevity’s annual reports for the years ended 31 December 2011 and 2012 and the interim report for the six months ended 30 June 2012 contained material misstatements and did not reflect the true state of the company’s affairs.
The SFC alleges that the former directors had allowed or caused China Longevity to overstate its cash and cash equivalents, and hence its net assets in its financial statements. They had also failed to cause or procure China Longevity to make timely, accurate and complete disclosure of the discovery of the overstatements and other audit irregularities by the then auditors of China Longevity.
