Hong Kong’s Securities and Exchange Commission (SFC) is seeking debarment 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 Article 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 chief executive officer, Mr Zhang Hongwang and Mr Huang Wanneng, both former Executive Directors.
The legal proceedings follow the SFC’s investigation into overstatements of China Longevity’s cash and cash equivalent balance by approximately RMB 198.9 million and RMB 302.4 million as of December 31, 2011 and June 30, 2012, respectively. overvaluations represented approximately 13.6% and 19.9% of China Longevity’s net assets on the aforementioned dates.
As a result, China Longevity’s annual reports for the years ended December 31, 2011 and 2012 and the interim report for the six months ended June 30, 2012 contained material inaccuracies and did not reflect the true state of affairs of the company.
The SFC alleges that the former directors had allowed or caused China Longevity to overstate its cash and cash equivalents and therefore its net assets in its financial statements. They also failed to cause or secure China Longevity to make timely, accurate and complete disclosure of the discovery of the overstatements and other audit irregularities by China Longevity’s then auditors.