Hong Kong Stock Exchange: disciplinary actions taken against TARGET INS and its 6 directors.

On November 25th, the Hong Kong Stock Exchange condemned TARGET INS (Holdings) Limited (delisted, former stock code: 6161) for issuing inaccurate, incomplete, and misleading business and resumption of trading prospect announcements regarding its business and resumption of trading prospects, and for the failure of all members of the board of directors to ensure the accuracy of the announcements. The Hong Kong Stock Exchange also made statements condemning and criticizing former chairman and non-executive director Wu Yu, executive director Liang Qin, non-executive director Ling Xujun, and other related individuals for harming investor rights. The Hong Kong Stock Exchange stated that TARGET INS is a long-term suspended company, with trading of its shares suspended since 2022. The company must prove by July 4, 2023, or earlier, that it has sufficient business operations to support its continued listing and resumption of trading, otherwise it will be delisted. During the period from March 3 to June 5, 2023 (several months before the resumption deadline), TARGET INS issued a series of announcements relating to its new insurance business planned in the United Arab Emirates (UAE) and the company's resumption of trading prospects. These announcements were all approved by the company's board of directors at the time. The announcements stated that in order to meet the requirement of sufficient business operations, its major shareholder Dr. Wu proposed on February 28, 2023, to donate a newly established licensed insurance company in the UAE named Himalaya Insurance to the company. The announcements presented a vision that with the injection of Himalaya Insurance, a licensed insurance company in the UAE capable of conducting multiple insurance businesses, the company could expand substantial international insurance business in the near future. TARGET INS purportedly planned to raise substantial new funds from investors for the proposed UAE insurance business, including the issuance of HK$4 billion in bonds. However, these announcements were significantly inaccurate and incomplete and gave a misleading impression of the company's readiness to conduct insurance business in the UAE. In reality, the business license and commercial activity permit obtained by Himalaya Insurance were limited to the Sharjah Publishing City Free Zone, not the entire UAE. The business license was valid for only one year and was set to expire in July 2023 (four months after the first related announcement was issued). The board of directors became aware of the license expiration in that month at the latest, but did not prompt the company to disclose the actual situation until October 2023. The Hong Kong Stock Exchange pointed out that the above actions further prevented investors from obtaining timely and accurate information about the company's business situation and resumption of trading prospects. The investigation found that despite the insurance industry being a regulated sector, the company had only conducted preliminary due diligence on Himalaya Insurance, without seeking appropriate advice on its regulatory status and related license operating scope. The due diligence conducted was also insufficient to confirm the license status, permitted business scope, applicable regulatory requirements, and license renewal process. For the above reasons, the Hong Kong Stock Exchange issued condemnation against TARGET INS (Holdings) Limited and made statements condemning and criticizing former chairman and non-executive director Wu Yu, executive director Liang Qin, non-executive director Ling Xujun, independent non-executive director Zhan Dayao, independent non-executive director Yu Zude, independent non-executive director He Xiaobin for harming investor rights.