CLARITY MEDICAL (01406) received legal proceedings against the company's directors. Trading will resume at 1pm on February 12th.

CLARITY MEDICAL (01406) announces that on February 5, 2025, its indirect wholly-owned subsidiary Shangfang Limited (Shangfang) as the plaintiff has issued a summons (ref: HCA 0198/2025) against WIT Limited controlled by Executive Director Dr. Xie Weiye (trading as Dr. Xie Weiye Eye Specialist Center); and Dr. Xie has issued a summons (ref: DCCJ 0676/2025). As stated in the summons against WIT Limited, Shangfang and WIT Limited entered into a Consultant Agreement (WIT Consultant Agreement) on April 4, 2022, where Shangfang agreed to engage WIT Limited (through its management consultant Dr. Xie) to provide medical consultation services at WIT Limited's medical center from April 4, 2022 onwards for a period of two years (unless terminated by either party with three months' written notice), with a fixed salary of HK$248,000 per month. According to the WIT Consultant Agreement, it was agreed that if WIT Limited (through its management consultant Dr. Xie) fails to achieve an annual total revenue of less than HK$3 million for any financial year ending March 31, Shangfang's payment to Dr. Xie for that financial year shall be reduced proportionally. Despite Shangfang having paid a total of HK$5.6792 million to WIT Limited as salary under the WIT Consultant Agreement during the financial years ending on March 31, 2022 (2022 financial year) and March 31, 2023 (2023 financial year), WIT Limited failed to meet the target income in each financial year. In fact, as stated in the summons against WIT Limited, the target income for each financial year was supposed to be HK$3 million, but WIT Limited only achieved HK$114,100 and HK$61,800 for the 2022 and 2023 financial years respectively. Therefore, under the WIT Consultant Agreement, Shangfang has the right to recover the excess payment made to WIT Limited as salary. As of the date of the summons, WIT Limited has not refunded or fully refunded the recoverable salary amount. Regarding the summons against Dr. Xie, on August 31, 2022, Shangfang, Dr. Liu Zhixin, and Xincheng Limited entered into a termination agreement, and mutually agreed (including Dr. Liu) for Dr. Liu to pay a total of HK$2.4 million as early retirement fees to Shangfang based on her commitment made on January 26, 2022. On August 31, 2022, Dr. Xie provided a guarantee and compensation guarantee for Dr. Liu's early retirement fees, unconditionally and irrevocably promised, guaranteed and assured to Dr. Liu to pay a total of HK$2.4 million in 48 equal installments every month, with HK$50,000 per installment. As of the date of the summons, Dr. Xie still owes HK$1.75 million. According to a transfer agreement dated January 14, 2025, Dr. Liu agreed to assign and transfer to Shangfang, and Shangfang agreed to assume all rights, interests, benefits, and ownership in respect of the above guarantee and compensation guarantee owed by Dr. Liu to Shangfang. Therefore, under the terms of the guarantee and compensation guarantee, Shangfang has the right to demand payment from Dr. Xie. As of the date of the summons, Dr. Xie has not refused or failed to pay the outstanding guarantee amount to Shangfang. The company has been informed by the Executive Director and Shangfang Director Mr. Lu Zikang that the actions claimed by Shangfang in this announcement were carried out by other directors of Shangfang and he was not involved. Furthermore, the company has applied to the Stock Exchange for the resumption of trading of its shares from 1:00 pm on February 12, 2025 (Wednesday).