RAFFLESINTERIOR(01376) has issued an announcement to inform the company's shareholders that it received an anonymous complaint letter on January 3, 2026, addressed to (among others) The Stock Exchange of Hong Kong Limited, the Securities and Futures Commission of Hong Kong, and the company.
The complaint letter is titled "Report on Suspected Violations of Chinese Foreign Exchange Control Regulations by Zheng Nenghuan, Tang Judi, and Others, Involving the Illegal Transfer of Assets Out of Mainland China and Tax Evasion Through Raffles Interior Limited."
The complaint references the content of the announcement and the complainant's investigation into the company's proposed acquisition of 100% equity in the target company (Kun Yuan Assets Limited, a company incorporated in Hong Kong) from the seller (China Gold Hong Kong Holdings Limited, a company incorporated in Hong Kong) for a consideration of HKD 300 million, a transaction that may constitute a very substantial acquisition and a connected transaction for the company.
Beyond the facts disclosed in the announcement, the complaint letter also alleges that: (i) the target company holds a 100% equity interest in Shenzhen Jinxu Technology Co., Ltd. (Shenzhen Jinxu, a company registered in Shenzhen), which in turn holds the land use rights for the target assets; and (ii) the equity of Shenzhen Jinxu was only transferred to the target company (whose director is Tang Judi, wife of Zheng Nenghuan) from Shenzhen Boshite Technology Co., Ltd., held by Zheng Hanchen and Tang Judi (wife of Zheng Nenghuan), on October 9, 2025, shortly before Mr. Zheng Nenghuan entered into the sale and purchase agreement related to the acquisition on November 3, 2025.
Based on the above findings, the complainant expressed concerns regarding, among other things: (a) suspected violations of Chinese foreign exchange control regulations and failure to complete necessary registrations/filings with the relevant Chinese authorities: The report suggests the pre-acquisition transfer might involve a Chinese domestic resident purchasing domestic assets, rights, or interests through their overseas entity, which, under Chinese foreign exchange rules, requires filing an application for foreign exchange registration with the State Administration of Foreign Exchange (SAFE) pursuant to the "Notice on Issues Concerning Foreign Exchange Control over Overseas Investment and Financing and Round-Trip Investment by Domestic Residents via Special Purpose Vehicles" (Hui Fa [2014] No. 37, "Notice 37").
The complainant states that Zheng Nenghuan and/or Tang Judi should have submitted the Notice 37 registration; however, available public information does not indicate that the relevant parties involved in the pre-acquisition transfer have completed the registration procedures stipulated by Notice 37.
The complainant cautions the company that such alleged failures to comply with the registration procedures under Notice 37 could constitute "circumvention of foreign exchange controls" or "illegal cross-border fund transfers."
The complainant further states that if the company proceeds with the acquisition without completing the registration formalities required by Notice 37, the transaction might constitute using an overseas listed platform to transfer domestic assets, rights, or interests that should be supervised by SAFE, potentially causing the company to violate relevant Chinese laws and regulations and harming the interests of the company's minority shareholders.
(b) Corporate governance and directors' duties: The complainant states that the Board of Directors has a responsibility to ensure the company's compliance with applicable laws and regulations, including fulfilling obligations for complete and fair disclosure.
The complainant notes that, although the company has disclosed its intention not to proceed with the acquisition, it has still not adequately disclosed the handling of the sale and purchase agreement.
The complainant requests that the company, among other things, conduct an independent and thorough verification regarding whether the responsibility to submit the Notice 37 registration has been fulfilled.
Upon receiving the complaint letter, the company has: (i) sought legal advice from its PRC legal counsel regarding the laws and regulations cited in the complaint letter and the contents of this announcement; and (ii) requested Zheng Nenghuan to confirm that the pre-acquisition transfer complies with relevant Chinese foreign exchange management and tax regulations and to submit relevant supporting documents.
The Board hereby notifies shareholders that, as of the date of this announcement, Mr. Zheng Nenghuan has not provided any positive confirmation to the company nor furnished sufficient supporting documents to refute the allegations contained in the complaint letter.
Furthermore, the Board is still awaiting the signing of a termination agreement for the sale and purchase agreement, in a form and substance satisfactory to the Board.
Having consulted its PRC legal counsel, the Board understands that under Chinese law, failure to comply with Notice 37 may constitute evasion of foreign exchange controls or illegal cross-border fund transfers.
Should the relevant assets be transferred to the company, this could potentially result in significant contingent losses for the company.
Unless Mr. Zheng can provide evidence of full compliance with Notice 37 or proof of the legality of the pre-acquisition transfer, the Board is unable to conclude on the completeness and accuracy of the complaint.
However, the Board believes it is prudent to disclose matters that may have a significant direct or indirect impact on the company and will continue to follow up on the relevant inquiries with Mr. Zheng Nenghuan.
The issues raised in the complaint letter will be subject to an independent investigation by the Independent Board Committee, which was established on December 10, 2025, and subsequently approved and ratified by the Board on December 15, 2025.