Hong Kong Stock Exchange: Disciplinary actions taken against Datang Group and a director and executive

On April 28, Hong Kong Exchanges and Clearing Limited took disciplinary actions against Datang Group Limited, a director, and a senior management member, issuing statements condemning and criticizing the former executive director and chairman, Mr. Wu Di, and the former senior management member and vice president, Mr. Liu Weiping, for harming investor rights during the delisting process. After investigation, it was found that the company engaged in a land compensation transaction worth 1.76 billion RMB through its subsidiary in 2022, and provided a total of 1.03 billion RMB in financial support to its controlling shareholder and related entities (the Controlling Shareholder Group), violating the major transaction and connected transaction provisions under Chapter 14 and 14A of the Listing Rules. This was because Mr. Wu failed to fulfill his fiduciary duties and act with the necessary skills, care, and diligence, and did not make sufficient efforts to ensure the company's compliance with the Listing Rules. In particular, he allowed the group to carry out the relevant transactions without complying with the Listing Rules and its internal monitoring and procedures, without informing the company's board of directors. Under the alleged authorization of Mr. Wu, Mr. Liu facilitated the group's provision of financial support to the Controlling Shareholder Group without (i) using the automated approval system and reporting mechanism in his office; and (ii) complying with the Listing Rules. As a result, Mr. Liu's actions or inaction led to violations, or his involvement in providing financial support to the Controlling Shareholder Group while being aware, resulted in the company breaching the announcement, circular, and independent shareholder approval requirements under Chapter 14A of the Listing Rules. Mr. Wu and Mr. Liu claimed that the financial support was provided because the Controlling Shareholder Group also occasionally supported the group financially. They also claimed to be unfamiliar with the applicable Listing Rules. The company, Mr. Wu, and Mr. Liu did not defend themselves against the violations of their respective Listing Rules and/or their responsibilities under the Listing Rules, and accepted the sanctions imposed on them.