Date Company/ Name Breach Conduct Disciplinary Actions
6 September 2019

• Shandong Molong Petroleum Machinery Company Limited (“Company”)

• Mr Zhang En Rong, former executive director (“ED”) and Chairman of the Company (“Mr ER Zhang”)

• Mr Zhang Yun San, former ED and Deputy Chairman of the Company (“Mr YS Zhang”)

• Mr Yang Jin, former ED and chief financial officer (“CFO”) of the Company (“Mr Yang”)

• Mr Guo Huan Ran, former ED and Chairman of the Company (“Mr HR Guo”)

• Mr Guo Hong Li, former non-executive director (“NED”) of the Company (“Mr HL Guo”)

• Ms Wang Chun Hua, former NED and independent non-executive director (“INED”) of the Company (“Ms Wang”)

• Mr Lin Fu Long, former ED of the Company (“Mr Lin”)

• Mr John Paul Cameron, former INED of the Company (“Mr Cameron”)

• Mr Xiao Qing Zhou, former NED of the Company (“Mr Xiao”)

• Mr Qin Xue Chang, former INED of the Company (“Mr Qin”)

(collectively, “Relevant Directors”)

• Mr Zhang Jiu Li, former supervisor of the Company (“Mr JL Zhang”)

• Mr Hao Liang, former supervisor of the Company (“Mr Hao”)

• Mr Fan Ren Yi, former supervisor of the Company (“Mr Fan”)

(collectively, “Relevant Supervisors”)
 




• MLR2.13(2)

• MLR3.08(a)

• MLR3.08(f)

• Director’s Undertaking




                       
• The matter concerned the Company’s disclosure of incorrect financial information (“Disclosure Issue”) and the delegation of responsibilities by Mr ER Zhang as ED and Chairman to another ED, Mr YS Zhang (“Delegation Issue”).

• The Company breached Rule 2.13(2) of the Exchange Listing Rules for failing to ensure that the Company’s financial information contained in the first quarterly, interim and third quarterly results and reports for 2015 and 2016 was accurate and complete in all material respects, and not misleading or deceptive.

• Mr ER Zhang, Mr YS Zhang and Mr Yang breached Rule 3.08(a) of the Exchange Listing Rules for failing to act honestly and in good faith in the interests of the Company as a whole in relation to the Disclosure and Delegation Issues.

• Mr ER Zhang, Mr YS Zhang, Mr Yang, Mr HR Guo, Mr HL Guo, Ms Wang, Mr Lin and Mr Cameron breached (a) Rule 3.08(f) of the Exchange Listing Rules in relation to the Disclosure Issue and/or Delegation Issue, for failing to to exercise the required care, skill and diligence; and (b) their respective Undertakings for failing to comply with the Exchange Listing Rules to the best of their ability and to use their best endeavours to procure the Company’s compliance with the Exchange Listing Rules and to maintain adequate risk management and internal controls.

• Mr Xiao and Mr Qin breached their respective Undertakings in relation to the Delegation Issue, for failing to use their best endeavours to put in place procedures for proper and adequate reporting of the Company’s affairs and operations to Mr ER Zhang.

• Relevant Supervisors breached their respective Undertakings with regard to Supervisors of the Company for failing to use their best endeavours to procure the Company and the Relevant Directors’ compliance with the Exchange Listing Rules.



REGULATORY MESSAGE:

A listed issuer’s disclosure of its financial information by way of periodic results announcements and reports is an important piece of information necessary for the shareholders and investors to appraise the listed issuer’s performance and future prospect, and to make their investment decisions. It is important that such disclosure contains accurate and complete information in all material respects, and not be misleading or deceptive.

The implementation of adequate and effective risk management and internal control systems is vital as those systems affect the listed issuer’s ability to comply with the Exchange Listing Rules.

Directors must read, understand and focus on the contents of such disclosure, and take all reasonable steps to ensure that the financial information to be disclosed is accurate. They must also follow up anything untoward that comes to their attention.

Directors must review the contribution and ability required of each director in order for him to be able to discharge his director’s duties and responsibilities.

SANCTIONS:

Public Censures of

• Shandong Molong Petroleum Machinery Company Limited

• Mr Zhang En Rong

• Mr Zhang Yun San

• Mr Yang Jin

• Mr Guo Huan Ran

• Mr Guo Hong Li

• Ms Wang Chun Hua

• Mr Lin Fu Long

• Mr Zhang Jiu Li

• Mr Hao Liang

• Mr Fan Ren Yi

Public Criticisms of

• Mr John Paul Cameron

• Mr Xiao Qing Zhou

• Mr Qin Xue Chang

with statement that had Mr ER Zhang remained in office, his retention of office would have been prejudicial to the interests of investors.

DIRECTIONS:

• The Company to appoint an independent compliance adviser for two years;

• The Company to retain an independent professional adviser to conduct an internal control review; and

• As a pre-requisite of any future appointment as a director of any company listed/to be listed on the Exchange, Mr ER Zhang, Mr YS Zhang, Mr Yang, Mr HR Guo, Mr HL Guo, Ms Wang, Mr Lin, Mr Cameron, Mr Xiao and Mr Qin, to attend training

as described in the news release.

NEWS RELEASE:

https://www.hkex.com.hk/News/News-Release/2019/1909062news?sc_lang=en