RAFFLESINTERIOR (01376) received a complaint letter regarding allegations of lowballing by Zheng Nenghuan.

RAFFLESINTERIOR(01376) announces that the board of directors received a complaint letter on June 10, 2026, from an anonymous complainant claiming to be a minority shareholder, addressed to the Hong Kong Stock Exchange and the Securities and Futures Commission. The title of the complaint letter is "Cheung Neng Huan fraudulently underreported the comprehensive offer price - a complaint from a minority shareholder of Raffles Interior Limited (stock code: 1376) - Mr. Cheung Neng Huan is suspected of underreporting the price paid for 51% of the controlling equity and related violations of the Takeover Code, Listing Rules, and Securities and Futures Ordinance." The complaint letter contains the following information: 1. The complaint refers to joint announcements dated August 7, 2025, and comprehensive documents sent on September 10, 2025, related to a mandatory unconditional cash offer made by Han Chen Holdings Limited (offeror), stating that prior to the offer, the offeror and its concert parties held a stake equivalent to 51% of the company's entire issued share capital. 2. The complaint alleges that Mr. Cheung Neng Huan actually paid approximately HK$63.6 million for the 51% stake, which is significantly lower than the disclosed amount by about HK$30 million (alleged underreporting). The complainant's information shows that the HK$30 million was not paid in the usual manner by the offeror but through multiple transactions conducted by entities controlled by Mr. Cheung Neng Huan in China on July 24th and 25th, 2025, just before the public announcement of the change in control. According to the complainant, the use of entities controlled by Mr. Cheung Neng Huan and splitting the payment into multiple transactions within two days align with the deliberate act of obscuring this part of the price from the disclosed transaction. 3. The complaint alleges that if the above is confirmed, it would mean (i) the price disclosed in the offer document was severely underreported by about half; (ii) the mandatory comprehensive offer price was correspondingly underreported; (iii) this action deprived minority shareholders of the higher price entitlement under Rule 26 of the Code on Takeovers and Mergers and Share Buybacks; (iv) the offer document (for which Mr. Cheung Neng Huan is personally liable) contained materially false or misleading information in critical details. If the undisclosed HK$30 million payment is confirmed, it could lead to a false confirmation in the offer document and potentially violate offenses and civil liability under the Securities and Futures Ordinance, as well as breaches of the Code on Takeovers and Share Buybacks. 4. The complaint mentions the opinion of Ascend Capital Limited (independent financial adviser) on the mandatory comprehensive offer, which believes that the offer price is unattractive, unfair, and recommends that shareholders subject to the comprehensive offer restrictions reject the offer. The complaint states that the conclusions of the independent financial adviser are significant for two reasons: first, even based on the reported underreported figure, the independent professional adviser still finds the offer price unattractive and unfair and advises shareholders to reject it. Secondly, if the actual price paid by Mr. Cheung Neng Huan was HK$63.6 million, the unfairness is even more severe; the controlling shareholder (Mr. Cheung Neng Huan) paid a price very close to the fair value for his own benefit, while the offer to minority shareholders was lowered to the criticized undervalued level by the independent financial adviser, fundamentally violating the principle of equal treatment underpinning the Code on Takeovers. 5. The complaint alleges that the underreported offer price is not an isolated incident but part of "a series of actions by Mr. Cheung Neng Huan that have led to and continue to harm the interests of minority shareholders," including: a. The lack of independent shareholder support for the mandatory comprehensive offer. The offer closed on October 2, 2025, with no revisions or extensions made, and received only four valid acceptances representing about 0.046% of the company's issued share capital, in line with the independent financial adviser's opinion that the offer price was not sufficient. b. Shortly after taking control, Mr. Cheung Neng Huan proposed to acquire a target company holding a plot of land in Shenzhen for a total of HK$300 million on November 3, 2025, without formal board authorization, leading to concerns and suspicion because the signatories and directors of the target company were Mrs. Tang Juxi, the spouse of Mr. Cheung Neng Huan and a 30% shareholder of the offeror, as shown in the offer document. c. A previous anonymous complaint alleged a breach of the Takeover Code by Mr. Cheung Neng Huan. The complaint claimed that Mr. Cheung Neng Huan (as an offeror of a mandatory comprehensive offer ending in October 2025) may have violated Rule 25 of the Takeover Code (which prohibits offerors from making arrangements with shareholders on terms not available to all shareholders within six months of the offer end), pointing out that Mr. Cheung Neng Huan had taken actions to make a special deal to offer significant returns to a major shareholder. The complainant further noted the importance of the ability of the independent board committee to investigate the protection of minority shareholder rights has been hindered by Mr. Cheung Neng Huan's lack of cooperation. d. The board received two claim letters from an international law firm representing claimants asserting "asset disposal rights" under various consulting agreements, giving the claimants the right to demand the transfer of their controlling interests in the company from Mr. Cheung Neng Huan. 6. The complaint raises doubts about whether the true economic substance of Mr. Cheung Neng Huan's acquisition of shares (and any related financing or undisclosed payments) has been accurately disclosed to the market. It suggests that a dominant director and controlling shareholder have repeatedly conducted transactions bypassing proper authorization and disclosure. 7. The complaint requests: a. SFC to investigate whether the offer document contains false or misleading price information and whether there have been violations of the Securities and Futures Ordinance and Takeover Code, review if the mandatory comprehensive offer price should be higher, and whether minority shareholders are entitled to any remedies or compensation, and consider whether Mr. Cheung Neng Huan is suitable to continue as a director and controlling shareholder of the listed company; b. HKEx to investigate compliance with disclosure and director duty provisions under the Listing Rules and consider whether further disclosures to the market are needed to correct any misleading impressions caused by the offer document. Although the company cannot verify the accuracy of the facts stated in the complaint letter, it considers the receipt of the complaint letter (which appears to be consistent with (including) several claim letters related to the "asset disposal rights" on November 20, 2025, and May 20, 2026, and an announcement on April 29, 2026, regarding a potential violation of the Takeover Code by Mr. Cheung Neng Huan engaging in a special transaction with a potential major shareholder of the company) and the potential consequences of the underreported offer price, and the series of actions alleged by the complaint letter against Mr. Cheung Neng Huan, to be material inside information for the company and its shareholders. After receiving the complaint letter, the company immediately contacted Mr. Cheung Neng Huan to seek clarification and verification of the claims and accusations made in the complaint letter, requesting Mr. Cheung Neng Huan to confirm and/or clarify (a) whether the allegations regarding the actual price of HK$63.6 million paid for the acquisition of the 51% controlling equity and subsequent underreporting of the public offer price to the regulatory authorities and the investing public are true or partly true; (b) whether Mr. Cheung Neng Huan, Han Chen Holdings Limited, or any related parties controlled by them (including the aforementioned "Hua Han" entities) made any payments, fund flows, or business arrangements on July 24th and 25th, 2025, or at any other time to supplement the acquisition cost of the 51% equity; (c) whether there are any undisclosed ancillary agreements, consulting arrangements, or additional compensation related to the control change transaction that have been concealed from the board and regulatory authorities. In his response, Mr. Cheung Neng Huan claimed that all the allegations were completely unfounded, and the burden of proof to disprove the existence of such matters should not lie with him, urging the board to disregard the complaint. The complaint letter states that the complainant has documentary evidence supporting the core allegations in the complaint letter and is willing to provide such evidence to the SFC and HKEx on a confidential basis. Despite Mr. Cheung Neng Huan's lack of cooperation in the company's due diligence inquiries, the company will continue to actively conduct internal investigations, including further detailed inquiries with Mr. Cheung Neng Huan. The company has also made inquiries to the former controlling shareholders of the company regarding the alleged matters and whether they comply with or violate (including) the Takeover Code, Securities and Futures Ordinance, and/or Listing Rules and their impact on the company and trading in the company's securities, seeking legal advice. Additionally, the company notes in the shareholder annual general meeting notice dated June 9, 2026 (with resolutions solely related to the re-election of directors), that if most of the current board members and/or members of the independent committee of the company (comprising all independent non-executive directors) are removed by vote, the company is concerned about any new directors nominated by Mr. Cheung Neng Huan, especially any new independent non-executive directors nominated by him, specifically if they can (i) independently and objectively handle the ongoing investigations; (ii) complete their independent investigations within the deadline set in the resumption guidance (as defined in the company's announcement on May 25, 2026); (iii) complete the independent investigations to the satisfaction of HKEx to meet the resumption guidance.