The Hong Kong Exchange condemns NC HEALTHCARE (01518) and several directors for violating related party transactions, resulting in a loss of billions.

On June 11, the Hong Kong Stock Exchange announced disciplinary actions against NC HEALTHCARE Holdings Limited (01518) and several directors. Among them, NC HEALTHCARE and three executive directors, including the Chairman and CEO Jason Zhou, were reprimanded; while three independent non-executive directors, including Mr. Jiang Yanfu, were criticized. In addition, the Stock Exchange directed NC HEALTHCARE to conduct an independent internal monitoring review, and all involved directors must complete training. The investigation found that executive directors Jason Zhou, Xin Hong, and Xu Han; and independent non-executive directors Mr. Jiang Yanfu, Mr. Sun Hongbin, and former non-executive director Mr. Guo Qizhi violated multiple Listing Rules in relation to a framework agreement with BJL, a joint venture company partly owned by Zhou. According to the framework agreement, the company agreed to provide hospital consulting services to BJL. The agreement did not specify when BJL was to pay for the services. From 2016 to 2021, BJL had not paid most of the service fees. The executive directors Zhou, Xin, and Xu allowed BJL to delay payment without reporting BJL's financial situation and deteriorating business performance to the board of directors, nor did they disclose to independent shareholders when seeking approval to renew the agreement. Members of the audit committee Jiang, Sun, and Guo were aware of BJL's long-standing overdue or unpaid service fees, but did not take sufficient action to protect the company's interests. Subsequently, BJL's unpaid service fees amounted to 140 million RMB, resulting in an impairment loss of 105 million RMB for the company in 2022. The individuals involved did not defend themselves against the violations of the Listing Rules and agreed to the sanctions and directives imposed on them.