The Hong Kong Securities and Futures Commission (SFC) has initiated legal proceedings under Section 214 of the Securities and Futures Ordinance, seeking disqualification orders from the Court of First Instance against three former directors of CHI LONGEVITY (formerly known as Sijia Group Limited, 01863).

The three former directors named in the SFC's legal proceedings are: former Chairman and Executive Director Lin Shenxiong (male), and two former Executive Directors Zhang Hongwang (male) and Huang Wanneng (male).

Prior to filing the legal action, the SFC investigated CHI LONGEVITY's overstatement of cash and cash equivalents by approximately RMB 198.9 million as of December 31, 2011, and RMB 302.4 million as of June 30, 2012. These overstated amounts represented approximately 13.6% and 19.9% of the company's net asset value on the respective dates.

As a result, CHI LONGEVITY's annual reports for the years ended December 31, 2011 and 2012, as well as its interim report for the six months ended June 30, 2012, contained material misstatements and failed to accurately reflect the company's financial condition.

The SFC alleges that the implicated former directors permitted or caused CHI LONGEVITY to overstate its cash and cash equivalents in the financial statements, thereby inflating its net asset value. They also failed to ensure timely, accurate, and complete disclosure of findings by the company's then-auditor regarding the overstated amounts and other audit irregularities.