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:
1. RMH Holdings Limited (Stock Code: 8437);
IMPOSES A PREJUDICE TO INVESTORS’ INTERESTS STATEMENT and CENSURE against:
2. Dr Loh Teck Hiong, former executive director, chairman and compliance officer;
3. Mr He Weiqing, former executive director, chairman, chief executive officer and compliance officer;
CENSURES:
4. Dr Seow Swee How, former executive director;
5. Mr Yang Zhangxin, former independent non-executive director and member of the Audit Committee;
6. Mr Loke Wai Ming, former independent non-executive director and member of the Audit Committee; and
7. Ms Wu Xiaoxia, former independent non-executive director and chair of the Audit Committee.
(The directors identified at (2) to (7) above are collectively referred to as the Relevant Directors.)
AND FURTHER DIRECTS each of the Relevant Directors (except Dr Loh and Mr He) to attend 15 hours of training.
The Relevant Directors were censured for breaching their directors’ duties and failing to procure the Company’s compliance with the GEM Listing Rules in relation to matters described below. As for Dr Loh and Mr He, given their substantial involvement in the irregularities and breaches, as well as their roles as compliance officers, the Exchange considered that their occupation of positions as directors or senior management members of the Company or any of its subsidiaries may prejudice investors’ interests.
Securities Investment
In October 2021, the Company established an investment department which was outside its principal business, and subsequently invested HK$15.7 million in securities. The Relevant Directors failed to meaningfully assess the capability and suitability of the head of investment, ensure that appropriate and effective internal controls were in place, maintain proper oversight of the investment activities, and procure the Company’s compliance with the GEM Listing Rules relating to discloseable transactions.
Dr Loh further authorised a change of the Company’s investment account from a cash account to a margin account without informing the board and without assessing and managing the associated risks.
As a result, the Company breached the disclosure requirements under the notifiable transaction rules, and suffered losses of approximately HK$12.9 million, representing 82% of the amount invested.
Rights Issue
In relation to the Company’s rights issue conducted in March 2022, Dr Loh and Mr He knew, or should have known, that one of the subscribers was a connected person. Without the board’s approval or knowledge, Mr He also allowed five subscribers (including the connected subscriber) to defer payment of subscription monies until one month after completion of the rights issue.
Dr Loh and Mr He caused or allowed the Company to publish announcements stating that all subscribers were independent third parties while failing to disclose the payment deferral. Consequently, the announcements were materially inaccurate, incomplete and misleading.
Service Agreement
In May 2022, without the board’s approval or knowledge, Mr He caused a subsidiary of the Company to enter into a service agreement with a company wholly owned by a connected person and prepay HK$3 million before any agreed financing services were provided. The amount was only fully refunded eight months after the agreement was terminated due to non-performance. Mr He failed to act in the Company’s interests, exercise reasonable skill, care and diligence, and procure the Company’s compliance with the GEM Listing Rules governing connected transactions.
Internal Controls
The Company’s internal controls were materially and persistently deficient, and the Company was unable to produce any written internal control policies for 2022, in which a majority of the above transactions or matters took place. The Relevant Directors failed to take adequate action to ensure that the Company maintained appropriate and effective internal controls.
Certain Relevant Directors sought to rely on delegation in purported discharge of their responsibilities in relation to the securities investments, rights issue and/or internal controls. However, they failed to maintain sufficient oversight or continue to take an active interest in these matters.
Key messages:
Directors must act in the best interests of the company and exercise reasonable care, skill and diligence. They are responsible for safeguarding the company's assets and must maintain an active and informed understanding of its business, operations and affairs.
Directors bear primary responsibility for ensuring compliance with the Listing Rules, including the accurate, complete and timely disclosure of material information. Effective risk management and internal control systems are essential to fulfilling this responsibility. Such systems should be appropriately designed, documented, implemented and regularly reviewed, with any identified deficiencies promptly addressed and rectified.
While directors may delegate certain functions, delegation does not absolve them of their duties. Directors must ensure that any delegation is reasonable and accompanied by adequate oversight. They should remain sufficiently informed, receive regular updates, make appropriate enquiries, follow up on any irregularities or concerns, and satisfy themselves that delegated responsibilities are being properly discharged.
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The Statement of Disciplinary Action is available on the HKEX website.
Ends