On the evening of May 3, Aoyuan Health (03662.HK) announced that the independent investigation committee established by the company has hired an international accounting firm to investigate the company and its controlling shareholder China Aoyuan (03883.HK) and an executive director. financial exchanges between them. The committee is composed of 3 independent non-executive directors of the company and has hired a Hong Kong lawyer as independent legal adviser.
According to the announcement, in the process of reviewing the company’s 2021 annual results, the company’s audit committee received a letter from the company’s auditor, which listed the company’s related parties The company’s board of directors informs the company’s shareholders and potential investors of the capital transactions. According to the contents of the auditor’s letter, the following capital transactions are mainly listed.
In December 2021, Aoyuan Health received 350 million yuan in transfer funds from an indirect wholly-owned subsidiary of China Aoyuan. The next day, the company transferred the same amount of funds. Transferred back to the subsidiary based on an undated and unsigned exclusive sales agency agreement between the company and China Aoyuan; Aoyuan Health and an entity company paid and received 5,000 on the same date in November 2021. RMB 10,000, the legal representative and executive director of the entity company holds various directorships in certain subsidiaries of Aoyuan Health and China Aoyuan, and holds interests in various subsidiaries of Aoyuan Health.
In addition, in December 2021, a subsidiary of Aoyuan Health, China Aoyuan and an entity company B (entity B is a supplier of China Aoyuan ) entered into a tripartite agreement to pay Entity B the funds in two separate payments of RMB 347 million and RMB 149 million. Aoyuan Health undertakes to provide funds to China Aoyuan to settle China Aoyuan’s debt to Entity B. Subsequently, China Aoyuan will refund the full amount to Aoyuan Health by the end of December 2021.
Aoyuan Health stated that there were several non-trade cash inflows and outflows between the company and China Aoyuan, with a total of 2.8 billion yuan and 2.9 billion yuan respectively. The auditor stated that it noted that Aoyuan Health and China Aoyuan entered into certain car park sales agency service agreements at the end of December 2020 and the first half of 2021.
Aoyuan Health said that after receiving the auditor’s letter, the company has taken corresponding actions immediately. On March 30, 2022, the company held a board meeting and decided to set up an independent investigation committee composed of all three independent non-executive directors Hong Jiaxi, Li Zijun and Wang Shao to conduct an investigation.
The Board of Directors of Aoyuan Health stated that the above-mentioned investigation is still in progress and neither the investigating company nor the independent legal counsel has reached any conclusion on the issue of capital transactions. In addition, after making reasonable enquiries, the Board of Directors learned that as of now, All funds involved in the transaction between the above-mentioned companies and parent company China Aoyuan have been fully settled.
Aoyuan Health’s shares will be suspended from April 1, 2022 Transaction. Its latest announcement quoted the board of directors as emphasizing that the company will fully assist auditors, independent investigation committee members and other institutions in handling annual performance verification matters with a positive attitude, and complete the financial report release and trading resumption as soon as possible.