AM Group Holdings Limited announced the results of an independent forensic investigation led by DLA Piper Hong Kong into a series of disputed transactions, alleged takeover plans and related legal actions. The inquiry was mandated under the Hong Kong Stock Exchange’s resumption guidance.
Scope and Methodology • Coverage included the alleged HK$240.00 million Cooperation Agreement, the 2020–2021 “Place Down”, the Majestic State (Opco) acquisition, two ongoing legal actions, and multiple side arrangements (including HK$16.50 million in loans and software-development contracts). • Procedures comprised document reviews, interviews, third-party checks and forensic transaction tracing. • Constraints involved incomplete records, limited access to subsidiary data, and non-cooperation from certain parties.
Key Findings 1. Alleged Takeover Scheme • No credible evidence substantiated the purported Cooperation Agreement or a viable plan for Show Times Chongqing to acquire a 75% stake in AM Group. • Documentary support was “incomplete, inconsistent, unsigned or unverified,” and claims in the 2024 and 2025 legal actions were mutually contradictory.
2. Place Down (July 2020) • The placement, executed via an independent Hong Kong broker, served the personal liquidity needs of controlling shareholders; no link to an external takeover was identified. • Management had no knowledge of placee identities beyond information provided by the agent.
3. Majestic State Acquisition (2020) • Considered commercially legitimate for PRC influencer-marketing expansion. • Structure—AM Group acquiring 80% in two tranches—contradicts any scenario in which the target would gain control of the parent.
4. Side Arrangements • Investigated loans and development contracts totaling HK$16.50 million. • No evidence of fund misappropriation, though unilateral control by former executive director Mr. Mu highlighted internal-control gaps.
5. Legal Actions • The 2024 and 2025 lawsuits seek monetary damages of HK$0.70 million, HK$26.80 million and unspecified sums, but neither names AM Group as a defendant. • Inconsistencies—particularly on whether specific performance is pursued—undermine the credibility of alleged obligations.
Impact Assessment • No material misappropriation of assets or operational disruption detected. • Principal risk is weak oversight of subsidiaries, especially Show Times Chongqing, formerly under Majestic State.
Board and Investigation Committee Response • The Board accepts the report and will: – Strengthen subsidiary oversight and reporting; – Enhance governance for significant transactions; – Enforce rights under acquisition agreements; – Seek legal advice following Majestic State’s winding-up.
Operational Status • Core Digital Marketing business remains active. • Majestic State and its subsidiaries have exited consolidation after a winding-up resolution; their financials will be excluded going forward. • The Group lacks current data on the Online E-Commerce Platform segment due to restricted access to records.
Trading Suspension AM Group shares have been suspended since 24 September 2024 and will remain so until all resumption conditions are met. Shareholders and investors are advised to exercise caution when dealing in the company’s securities.