The party involved FORGAME HOLDINGS LIMITED (STOCK CODE: 484).
The Company experienced a significant impairment loss of approximately RMB100 million in 2019 due to loans that had been advanced as part of a new corporate lending business. This loss constituted approximately 75% of the Company’s total corporate loan receivables at that time. The reason for the impairment was the overdue status of many loans and the inability to reach several borrowers.
It was found that
- During the loan approval process, Ms. Li and Mr. Wang were made aware of concerns and risk alerts related to some of the loans. For instance, they were informed that the financial data provided by an applicant was dubious and that the proposed security might not be adequate.
- Despite receiving recommendations to take follow-up action based on the risk alerts, Ms. Li and Mr. Wang went ahead and approved the loans. There is no documentation indicating that any follow-up action was taken after the loans were approved.
- The investigation revealed that there were multiple shortcomings in the internal controls related to the lending business.
Therefore, after an investigation by HKEx, each of the mentioned directors need to attend training.
resource: https://www.hkex.com.hk/News/Regulatory-Announcements/2023/230316news?sc_lang=en