香港聯合交易所有限公司
(香港交易及結算所有限公司全資附屬公司)
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:
- Enviro Energy International Holdings Limited (Stock Code: 1102);
- Mr Pu Wei, former executive director; and
- Mr Zhang Yuan Qing, former executive director.
AND DIRECTS:
each of the above directors to attend training.
Between June 2017 and March 2018, the Company made four prepayments totalling over RMB 388 million purportedly to purchase certain building materials for its construction projects. There was no apparent commercial substance or business rationale for the prepayments.
Each of the prepayments exceeded 8 per cent of assets ratio of the Company, which constituted an advance to an entity under the Listing Rules. The Company failed to announce as soon as reasonably practicable details of the advances to an entity in accordance with the announcement requirements set out in Rule 13.15.
The Exchange found that the directors, whether or not they were directly involved in the decision to enter into the procurement agreements relating to the prepayments, had failed to properly consider and take steps to ensure that the Board was aware of and had considered the potential Rule implications involved to ensure the Company’s compliance with the Listing Rules.
Key Messages:
Transactions which involve substantial prepayments should be subject to scrutiny. In this case, the transactions in question lacked commercial substance, and exposed the company, and accordingly its investors, to risk of significant losses. The disclosure requirements in the Listing Rules regarding advances to an entity are not contingent on the company’s expectation that the monies will be repaid.
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