Hong Kong Securities and Futures Commission: Obtains 6-year disqualification order against former vice chairman of CM International, Zhang Yuqing.

The Securities and Futures Commission of Hong Kong announced the cancellation order against Zhang Yuqing, former Vice Chairman and Executive Director of China Metal International Holdings Limited (China Metal International), in the original court. Without the court's permission, Zhang is not allowed to serve as a director of any listed or non-listed corporation in Hong Kong, and is not allowed to participate in the management of such corporations for a period of six years. The duration of this cancellation order reflects the seriousness of his misconduct. This legal proceeding originated from the investigation of the Securities and Futures Commission, which revealed that Zhang committed misconduct during his tenure at China Metal International. Specifically, the Commission found that Zhang failed to fulfill his duties as a director with appropriate skills, care, and diligence, as he did not prevent or disclose to the board the unauthorized transfer of a total of 150 million RMB; and the sale of equity in "Zhongwei Passenger Vehicle", both of which involved two former executive directors of China Metal International (the Xu brothers). Although the China Metal International board approved the transfer of 150 million RMB to be used for repayment of intra-group loans and other bank debts, the Xu brothers did not comply with the board's resolution as expected, and after making unauthorized transfers of funds to two private companies they owned or controlled, they refused to return the funds to China Metal International. Zhang did not inform the board promptly at the time of these incidents. As for the sale of 20% equity in "Zhongwei Passenger Vehicle", the equity was transferred to a private company owned or controlled by the Xu brothers at a significantly lower price than its value, and China Metal International or its subsidiaries did not receive any payment. Zhang, who served as a director of "Zhongwei Passenger Vehicle" and was responsible for its financial management, should have been aware of the equity change and taken actions to prevent or report the sale but failed to inform the board, violating his duty to protect the interests of China Metal International. Considering Zhang's knowledge of the unauthorized fund transfers and his role in the management of "Zhongwei Passenger Vehicle", he should have known that China Metal International's 2011 interim performance did not reflect the unauthorized fund transfers and the sale, but he still approved the release of the 2011 interim performance, which contained false or misleading information. Although there were no allegations of personal gain in the unauthorized fund transfers or the sale, the court, after considering the seriousness of his violations and the substantial amounts involved, agreed with the Securities and Futures Commission that a six-year cancellation order was an appropriate measure.