Hong Kong Exchanges and Clearing Limited’s subsidiary, The Stock Exchange of Hong Kong Limited (HKEX), has issued a public statement of disciplinary action against Lisi Group (Holdings) Limited (“Lisi Group”) and seven former senior officers for extensive breaches of the Main Board Listing Rules tied to unapproved fund transfers and supplier prepayments.
Key Sanctions and Directions • Lisi Group – Public censure. • Six former directors – Mr. Li Lixin (ex-Chairman & ED), Mr. Cheng Jianhe (ex-ED), Ms. Jin Yaxue (ex-ED), Mr. Shin Yick Fabian (ex-INED), Mr. He Chengying (ex-INED) and Mr. Kwong Kwan Tong (ex-INED) – each receive a public censure and are subject to a “prejudice to investors’ interests” statement. • Ms. Pang Yuen Shan Christina (former company secretary) – public censure and an order to complete 24 hours of training on Listing Rule compliance, directors’ duties and corporate governance.
Principal Findings 1. Connected-party fund transfers • From April 2021 to June 2024, subsidiary Ningbo New JoySun Corporation made 333 interest-free, unsecured transfers (“Fund Transfers”) to Ningbo Lisi Holding Ltd., a private firm controlled by then-chairman Mr. Li. • Transfers spanned three financial years, peaking at a daily outstanding balance of RMB 329 million. Each month ended with a nil balance after repayments, and no written agreements or commercial benefits were documented. • HKEX concluded the activity amounted to 31 discloseable and connected transactions, 191 major and connected transactions and two advances, all executed without mandatory announcements, circulars or shareholder approvals. • External auditors highlighted the issue in FY2022, FY2023 and FY2024 board and audit committee meetings, but transfers continued until June 2024. Public disclosure was only made on 12 July 2024.
2. Large prepayments to suppliers • In March 2024, subsidiary Ningbo Lisi Household paid RMB 244 million in advance to three independent suppliers to secure raw materials for a tender bid that was ultimately unsuccessful. • The prepayments constituted two discloseable transactions and one major transaction under Chapters 14/14A, yet were not announced before execution. All funds were repaid by 6 June 2024 and belatedly disclosed in July 2024.
3. Systemic control failures • HKEX cited inadequate internal controls, poor board oversight and failure to consult the appointed compliance adviser despite prior censures and warning letters (2014–2016) and a July 2023 public censure for similar rule breaches. • The directors breached their fiduciary, diligence and conflict-of-interest duties (Rules 3.08, 3.09B(2)); Ms. Pang was found to have failed in her governance role (Rule 2A.10B(3)).
Remediation Efforts Subsequent to the investigation, Lisi Group announced measures between October 2024 and December 2025, including: • Comprehensive internal-control reviews and system upgrades to flag unauthorised payments. • Establishment of an Internal Control Monitoring Group, mandatory written agreements for connected transactions and heightened reporting thresholds (prepayments above RMB 30 million require committee review). • Ongoing daily monitoring of connected transactions, prepayments and financial assistance.
Context and Implications HKEX’s latest action underscores persistent compliance lapses at Lisi Group despite repeated regulatory interventions. The “prejudice to investors’ interests” statements against six former directors signal heightened scrutiny of individual accountability. While all parties accepted the findings without contest, HKEX emphasised that the sanctions target only the specified individuals and the company, not current management.
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