Exchange’s Disciplinary Action against Jilin Province Huinan Changlong Bio-pharmacy Company Limited (Stock Code: 8049) and Nine Directors

香港聯合交易所有限公司
(香港交易及結算所有限公司全資附屬公司)
THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)

The Stock Exchange of Hong Kong Limited

CENSURES:
(1) Jilin Province Huinan Changlong Bio-pharmacy Company Limited (Stock Code: 8049);

IMPOSES A DIRECTOR UNSUITABILITY STATEMENTagainst:
(2) Mr Gao Yong Cai, former independent non-executive director;

CRITICISES:
(3) Mr Zhang Hong, executive director, chairman and compliance officer;
(4) Mr Wu Guo Wen, executive director;
(5) Mr Xu Xiang Fu, executive director;
(6) Mr Zhang Xiao Guang, executive director;
(7) Mr Zhao Bao Gang, executive director;
(8) Mr Zhang Yi, executive director;
(9) Mr Gao Qi Pin, independent non-executive director;
(10) Ms Tian Jie, independent non-executive director;

AND FURTHER DIRECTS:
review of the Company's internal controls for procuring compliance with Chapter 19 of the GEM Listing Rules and each of the above directors to attend training, except Mr Gao Yong Cai.

The statement made in respect of Mr Gao Yong Cai above is made in addition to a public censure against him. The Director Unsuitability Statement is a statement that, in the Exchange's opinion, Mr Gao Yong Caiis unsuitable to occupy a position as director or within senior management of the Company or any of its subsidiaries.

Between 2018 and 2020, the Company entered into 91 subscriptions for wealth management products which were subject to Rule requirements as they were discloseable or major transactions. For 62 out of the 91 subscriptions, the Company failed to comply with the applicable disclosure or shareholder approval requirements.

The Company has a history of non-compliance of this nature, and in 2018 had been formally warned by the Division for its earlier breaches. By way of remediation, the Company announced on 17 July 2018 that it had adopted several measures to prevent any further non-compliance, specifically in relation to investments in wealth management products. However, it is evident from the continuing, repeated breaches of this very nature that these measures either were not adopted or were ineffective.

The directors were responsible to ensure that the Company had an adequate and effective internal control framework, but they failed in their duty, even after being made aware of the deficiencies and committing to remedial action. Mr Zhang Hong, as the Company's compliance officer, breached his duties to advise and assist the Board in implementing procedures to ensure the Company's Rule compliance.

Mr Gao Yong Cai failed to cooperate with the Exchange's investigation.

The Company and directors, other than Mr Gao Yong Cai, admitted their breaches and agreed to settle the disciplinary action.

Ends