The party involved the Former Executive Director, Chairman and CEO of Hygieia Group Limited.
The Company used a large sum of their funds shortly after the listing, including entering into a discretionary investment management agreement and several contracts for public relations and advisory services. These agreements were not mentioned in the Company’s prospectus, meaning that investors were unaware at the time of their involvement.
However, it was found that
- The Company made no enquiries or exercised any oversight concerning the investments, despite providing a substantial up-front fee to the investment manager.
- The investment manager decided to invest almost the entire amount in a single private company that specialized in antique jewellery. In addition to purchasing this Company’s stock, the investment manager also invested money in a promissory note issued by the same private entity.
- The fees paid by the Company to the service providers were found to be exorbitant compared to industry standards and other available providers. These excessive fees had no commercial rationale, as inadequate due diligence was conducted on the service agreements. This was also a breach of the Company’s internal controls that should have required it to obtain fee quotations from other providers before approving service agreements.
Therefore, after an investigation by HKEX, the Company had not conducted adequate due diligence on the service providers, and it breached of the Company’s own internal controls. Therefore, the concerned party have to attend training.
resource: https://www.hkex.com.hk/News/RegulatoryAnnouncements/2023/230228newssc_lang=ennouncements/2023/230228news?sc_lang=en