Hong Kong-listed Midea Real Estate Holding Limited (stock code: 3990) has reported that three wholly-owned subsidiaries placed funds into entrusted investment products during January–December 2025 and, through the relevant trustees, ultimately provided loans to connected parties amounting to a peak outstanding balance of RMB650.00 million.
Key transaction structure • Subsidiaries Foshan Meizhi and Guangdong Meizhi signed three wealth-management trust agreements with Wanxiang Trust, Yuecai Trust and Zhongyuan Trust. • Maximum investment limits were set at RMB500.00 million, RMB250.00 million and RMB1.00 billion, with reference net annual returns of 3.85 % and 3.20 %. • Using these entrusted funds, the trustees extended unsecured, on-demand loans to Shenyang Zhenghui, Nanhai Meiming and Shunde Tianmei at identical interest rates. The individual loan schedule peaked at RMB650.00 million; all principal and accrued interest were fully repaid by 31 December 2025.
Connected-party nature Shenyang Zhenghui (50 % owned by Shenyang Meiyi), Nanhai Meiming and Shunde Tianmei are indirectly controlled by Ms. Lu Deyan, a controlling shareholder of Midea Real Estate. The transactions therefore constitute connected transactions under Chapters 14 and 14A of the Listing Rules. Aggregated percentage ratios exceeded 5 % but were below 25 %, classifying the dealings as discloseable and non-exempt connected transactions that required timely announcement, circular and independent shareholders’ approval.
Breach of Listing Rules The company acknowledged that no such approvals were sought at the time. Management attributed the lapse to: 1. Miscommunication between business and compliance teams, which focused only on the trustees—independent third parties—without tracing the ultimate loan recipients; and 2. An internal-control framework not yet adapted to the Group’s post-restructuring cash-management activities.
Financial context As at 31 December 2024, the Group held cash and cash equivalents of RMB1.03 billion. Management considered the entrusted products attractive given yields of 3.20–3.85 %, versus prevailing bank deposit rates of roughly 0.65–0.85 %.
Remedial measures To prevent recurrence, Midea Real Estate will: • Engage an external internal-control consultant to review and upgrade policies covering discloseable and connected transactions; • Issue detailed guidelines on entrusted investments and related-party dealings to all relevant staff; and • Maintain closer, proactive dialogue with professional advisers on Listing Rule compliance.
With the loans fully settled and the trust agreements terminated, the company will not issue a circular or convene a general meeting for retrospective approval.
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