Hong Kong Stock Exchange: Disciplinary Actions Against China's Carbon Neutrality (01372) and Seven Directors

Zhitong Finance App learned that on November 3, the Hong Kong Stock Exchange announced disciplinary action against China Carbon Neutrality Development Group Limited (01372) and seven directors. Condemned: China Carbon Neutrality Development Group Co., Ltd. (01372), Executive Director and CEO Mr. Lu Xiangyong, Executive Director, Mr. Zhong Guoxing, Non-Executive Director and Vice Chairman, Mr. Wang Jiasi, former Executive Director and Chairman, Mr. Sha Tao, former independent non-executive director, Ms. Lan Haiqing, and former independent non-executive director, Mr. Wang Anyuan. The above directors were further instructed to complete the training.

According to an investigation by the Hong Kong Stock Exchange, the company's second interim results and second interim report for the twelve months ended 31 December 2023 significantly overestimated its carbon credit assets by HK$58.7 million. Affected by this, the fair value return of the company's carbon credit assets was overestimated by HK$58.7 million, while losses were also undervalued by HK$58.7 million. Details are as follows:

According to the company's report, the amount of its carbon credit assets as at 31 December 2023 was HK$69.4 million, which is said to have increased 680% year-on-year. However, the actual asset amount was actually only HK$10.7 million, and the overestimated HK$58.7 million was equivalent to 48% of the company's share value announced at the time.

The company's report also showed that the fair value return on its carbon credit assets for the 12 months ended 31 December 2023 was HK$60.5 million, but the actual amount was only HK$1.8 million. As a result, the company's actual loss for this period should have been HK$70 million instead of its reported loss figure of HK$11.3 million. The loss amount was underestimated by 519%.

The value of the company's carbon credit assets is said to have increased by 680% year over year. This situation should have drawn the directors' attention to the accuracy of the relevant data. However, the relevant directors did not take sufficient measures to review whether the assessment of the relevant assets was appropriate, causing the information contained in the company's interim results and interim report to be substantially inaccurate or misleading, in violation of section 2.13 of the Listing Rules.

In addition, the Hong Kong Stock Exchange also launched an investigation into the company's prepayment of RMB 33.8 million to a service provider in October 2023 and the acquisition of a mainland Chinese company for HK$30 million in March 2024. The Hong Kong Stock Exchange found that the company had failed to promptly disclose these two transactions, in violation of the provisions of Chapters 13 and 14 of the Listing Rules. Mr. Di Ling and Mr. Chung Kwok-hing approved the transaction, but their erroneous assessment or overlooked the applicable provisions of the relevant “Listing Rules” involved.