At a disciplinary hearing held on 28th August 2001 (the "Disciplinary Hearing"), the Listing Committee of the Exchange (the "Listing Committee") conducted a hearing into the conduct of, among others, the Company, Mr. Sze Man Bok (executive director of the Company), Mr. Hui Chi Lin (executive director of the Company), Mr. Yeung Wing Chun (executive director of the Company), Mr. Hung Ching Shan (executive director of the Company), Mr. Zhang Shi Pao (executive director of the Company), Mr. Xu Da Zuo (executive director of the Company), Mr. Xu Chun Man (executive director of the Company) and Mr. Yue Wai Leung Stan (former executive director of the Company, who resigned effective 24th March 2000), in respect of certain connected transactions as disclosed in the Companys announcement dated 22nd March 2000 (the "Connected Transactions").
During the period from September 1999 to December 1999, the Company and its subsidiaries (the "Group") had made temporary advances of HK$46,425,000 to United Wealth International (Holdings) Limited ("United Wealth") and Changde Hengan Paper Products Co., Limited ("Changde Paper") for its purchase of production equipment and raw materials (the "Temporary Advances"). The Temporary Advances, representing approximately 3.02% of the Groups consolidated net tangible assets as at 31st December 1999, were fully repaid with interest and handling fee between early January 2000 and February 2000.
United Wealth was wholly owned by four executive directors of the Company, namely, Mr. Sze Man Bok, Mr. Hui Chi Lin, Mr. Hung Ching Shan and Mr. Yeung Wing Chun. They, in aggregate, owned approximately 47% of the issued share capital of the Company. Changde Paper was a 94% owned subsidiary of United Wealth. United Wealth and Changde Paper were therefore associates of a connected person as defined by the Exchange Listing Rules, hence, the Temporary Advances constituted connected transactions of the Company.
The Disciplinary Hearing was conducted into, among other things, the following issues:
The Company acknowledged breaching Rules 14.25(1) and 14.26(6)(a) of the Exchange Listing Rules.
The Listing Committee has concluded, among other things:
Accordingly, the Listing Committee hereby publicly criticises the Company and each of the Relevant Directors for their respective breaches mentioned in (i) and (ii) above.
For the avoidance of doubt the Exchange confirms that this public statement which involves criticism applies only to the Company, the directors and the former director named herein and not to any other past or present member of the Board of Directors of the Company.