Wenye Group Holdings Limited has revealed that its Hong Kong subsidiary, Longxin Investment Holdings, signed a USD 20.25 million (HKD 157.95 million) construction contract on 10 March 2025 with The Palette Inc. for the interior and exterior fit-out of a 192-room five-star hotel project in Saipan. The 365-day project also includes installation of ancillary facilities and a one-year quality-assurance period.
The Palette Inc. is 65% owned by former non-executive director Chen Li (35%) and his son, current executive director Chen Zhouyu (30%). Their combined control classifies The Palette Inc. as an “associate” and therefore a connected person under Hong Kong Listing Rule 14A.12(2)(b). Because of this relationship, the Saipan Contract is deemed a connected transaction requiring public announcement, circular issuance, and prior approval from independent shareholders—steps the company admits it failed to take due to a misinterpretation of the rules.
Key contract terms: • Total consideration: USD 20.25 million • Payment schedule: 10% advance, monthly progress payments, 95% on completion, 5% retention for defects liability • Scope: Full interior/exterior decoration and equipment installation for the luxury hotel development • Project rationale: Showcases Wenye’s capabilities on an international high-end project and provides new revenue
Regulatory response: • An Independent Board Committee has been formed; an Independent Financial Adviser will be appointed. • An extraordinary general meeting (EGM) for independent shareholders to ratify the contract is targeted by 30 June 2026, with a circular to be dispatched by 30 April 2026. • Chen Zhouyu and his associates will abstain from voting at the EGM. • Remedial measures include enhanced Listing Rules training, strengthened internal controls, and ongoing professional advice.
Trading status: Wenye Group shares have been suspended since 5 December 2025 and will remain halted until the Hong Kong Stock Exchange’s resumption requirements are satisfied. Investors are urged to exercise caution when dealing in the company’s securities.