The Hong Kong Stock Exchange has issued a statement condemning the former company secretary of VENUS MEDTECH-B (02500), Huang Weichao, and has further instructed him to complete mandatory training. Huang Weichao failed to perform in accordance with the expected role and responsibilities of a company secretary. Consequently, under Rule 2A.10B(3) of the Listing Rules, he was found liable for the company's violation of the Listing Rules concerning the provision of unauthorized financial assistance to two directors.
The Exchange noted that VENUS MEDTECH-B disclosed that between January 2020 and June 2023, it provided unauthorized financial assistance of approximately RMB 2.477 billion to two executive directors. The company admitted to, among other things, breaching the reporting, announcement, circular, and independent shareholder approval requirements under Chapters 13, 14, and 14A of the Listing Rules.
The Exchange determined that Mr. Huang Weichao was appointed as a co-company secretary on January 18, 2021. His responsibilities included reviewing the company's interim and annual results and reports and providing input on their content. During the preparation of the financial statements for the 2021 and 2022 fiscal years, Mr. Huang received drafts that mentioned the unauthorized financial assistance. However, he did not personally review these drafts.
According to the company's announcements, after the publication of the 2021 and 2022 fiscal year results and annual reports, the two directors obtained further financial assistance without authorization and in violation of the Listing Rules. Had Mr. Huang properly fulfilled his duties by personally reviewing the draft financial results, he could have identified potential breaches of the Listing Rules, raised them with the board, and provided professional advice to help the company (i) take timely remedial actions (including making disclosures), (ii) prevent further unauthorized financial assistance, and (iii) ensure any future financial assistance complied with the relevant Listing Rules.
However, Mr. Huang, a deputy director at a corporate service provider, delegated his company secretary functions to the provider's service team and relied on other professional advisors to alert him to irregularities. After delegating these functions, Mr. Huang did not actively supervise the delegated work nor adequately understand matters related to fulfilling his own duties. The involvement of other professionals does not absolve Mr. Huang of his professional responsibility as a co-company secretary.
Mr. Huang did not contest the ruling that he violated the Listing Rules and agreed to accept the imposed sanctions and directives.