The Hong Kong Securities and Futures Commission seeks a court order to disqualify three former directors of CHI LONGEVITY Limited (01863).

The Securities and Futures Commission of Hong Kong initiated legal proceedings under section 214 of the Securities and Futures Ordinance, seeking the original court to issue disqualification orders against three former directors of CHI LONGEVITY Limited (formerly known as Sijia Group Limited, 01863). The three former directors involved in the SFC legal proceedings are: former chairman and executive director Lin Shengxiong (male); former executive directors Zhang Hongwang (male) and Huang Wanneng (male). Before initiating the above-mentioned legal proceedings, the SFC had conducted an investigation into the exaggeration of cash and cash equivalents balances of CHI LONGEVITY as of December 31, 2011 and June 30, 2012, amounting to approximately RMB 198.9 million and RMB 302.4 million respectively. The exaggerated amounts accounted for approximately 13.6% and 19.9% of CHI LONGEVITY's net assets on the respective dates. Therefore, the annual reports for the years ended December 31, 2011 and 2012, and the interim report for the six months ended June 30, 2012 of CHI LONGEVITY contained material misstatements and did not accurately reflect the company's financial position. The SFC alleged that the involved former directors allowed or caused CHI LONGEVITY to overstate its cash and cash equivalents in the financial statements, resulting in an overstatement of its net assets, and failed to cause or prompt CHI LONGEVITY to timely, accurately, and completely disclose the auditor's findings on the overstated amounts and other audit irregularities.