AM Group Holdings Limited (AM Group) released the key findings of its Independent Internal Control Review (IC Review) and subsequent Follow-up Review, conducted by Fan, Michell Risk Advisory Services. The work fulfils one of the Hong Kong Stock Exchange’s resumption requirements after the company’s prolonged suspension since 24 September 2024.
The IC Review covered the period 1 April 2024 to 31 March 2025, with fieldwork performed from June to August 2025 and a Follow-up Review from 22 September to 10 October 2025. Seven material control deficiencies were highlighted; management has implemented corrective actions that the consultant deems commensurate with the related risks.
Key deficiencies and remedial progress:
1. Board Composition • Issue: Non-compliance with Listing Rule 3.10 from 11 October 2024 to 28 February 2025 due to an insufficient number of independent non-executive directors (INEDs). • Action: Appointment of a new INED on 1 March 2025, approval of a formal succession plan, and continuous monitoring of Board-composition metrics.
2. Governance of Significant or Abnormal Investments (incl. VIE structures) • Issue: Absence of documented policies for evaluating and overseeing major or unconventional investments, leading to over-reliance on PRC subsidiary directors. • Action: Adoption of a mergers-and-acquisitions policy manual detailing due-diligence, approval limits, independent oversight teams, quarterly performance reporting, semi-annual internal audits, and a formal authorisation matrix.
3. Risk-Assessment Documentation • Issue: Risk assessments performed but not formally recorded. • Action: Semi-annual risk-assessment reports now prepared by the COO/CFO, endorsed by the Board; September 2025 report reviewed by the consultant.
4. Regulatory-Compliance Framework • Issue: No centralised compliance manual or checklist. • Action: Introduction of a multi-jurisdictional compliance checklist specifying obligations, timelines and responsibilities.
5. Accounting-System Access Controls • Issue: No formal procedure for user-account creation, deletion or modification. • Action: Implementation of a user-rights register reviewed quarterly by the COO/CFO.
6. Data-Backup and Restoration • Issue: Annual backups and lack of documented restoration tests. • Action: Monthly encrypted backups with quarterly restoration tests; logs reviewed by senior management.
7. Timeliness of Consolidated Management Accounts • Issue: Semi-annual consolidation hindered by limited data from PRC subsidiaries, delaying compliance with Listing Rules 13.46 and 13.48. • Action: Mandatory monthly subsidiary reporting (except dormant entities), semi-annual consolidation reviewed by the COO/CFO; head-office access to subsidiary systems and cloud-based document uploads. The Board has approved a plan to de-consolidate PRC subsidiaries after ongoing investigations conclude, eliminating system-integration constraints.
Follow-up Review Outcome The consultant confirmed that all material deficiencies have been fully addressed and residual risks lowered. The Audit Committee and the Board concur, stating that AM Group now maintains “adequate and reliable” governance, internal-control and financial-reporting systems consistent with Listing Rule requirements.
Trading Status AM Group’s shares remain suspended pending fulfilment of the HKEX resumption guidance. Investors are advised to exercise caution when dealing in the company’s securities.