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SFC Suspends Dealings in DASHAN EDU Shrs over Severe Overstatement of Corporate Bank Balances
Recommend 6 Positive 2 Negative 6 |
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The Securities and Futures Commission (SFC) has directed The Stock Exchange of Hong Kong Limited to suspend dealings in the shares of DASHAN EDU (09986.HK) under the Securities and Futures (Stock Market Listing) Rules (SMLR), effective today (3rd) from 9:00 am. The SFC took this action because it considers that suspending dealings in Dashan's shares at this stage is desirable to maintain a fair and orderly market and to protect the interest of the investing public while the SFC continues its investigation. Dashan's shares have been suspended from trading since last Friday (November 28) at the company's request, pending the release of inside information. According to the SFC, Dashan's shares were suspended for trading on March 30, 2023, after the company's former auditor identified certain audit matters in relation to, amongst others, its software development project between April 2022 and November 2023 (Software Development) and its acquisition of a UK-based company in September 2022 (UK Acquisition). Trading in Dashan shares resumed in September 2024, following an investigation by Dashan and its advisers into the audit matters, which concluded with no adverse findings. However, when the SFC made its own inquiry into the payments relating to the Software Development and the UK Acquisition, it uncovered material discrepancies between the bank statements provided by Dashan and those it obtained independently. In particular, the bank statements provided to the SFC by Dashan omitted specific circular fund flows that returned to Dashan. The SFC also discovered material overstatements of bank balances in Dashan's financial statements, totaling RMB36.4 million as of June 30, 2023, and RMB76.3 million as of December 31, 2023. These figures represented 19% and 55% of Dashan's net asset value as stated in its published financial results. This led the SFC to suspect that (i) the Software Development and the UK Acquisition were neither genuine nor conducted at arm's length; (ii) Dashan had submitted fabricated bank statements to the SFC to conceal questionable fund flows related to these transactions; and (iii) Dashan's published accounts significantly overstated its corporate bank balances. These issues raised serious concerns about the integrity of Dashan's management. The SFC further suspected that the resumption of trading in Dashan's shares on September 2, 2024, was based on false or misleading information provided by Dashan, and the mistaken belief that all the conditions in the Stock Exchange's resumption guidance had been satisfied. AAStocks Financial News |
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