Daqing Dairy independent review panel dissolves
The independent review committee set up by listed mainland firm Daqing Dairy is in tatters as shareholders are at a loss how the company has been conducting its affairs since auditor Deloitte resigned in March.
Daqing suspended trading of its stocks on the Hong Kong stock exchange in March when Deloitte resigned as its auditor.
Explaining its resignation, Deloitte cited concerns over the company's financial statements, including 'certain milk procurement transactions brought to the attention of management and acknowledged by them to be fraudulent', unexplained discrepancies in sales receipts, and difficulties the auditors experienced in their visits to the local branch of one of Daqing's banks.
Yesterday, Daqing announced on the HKEx website that the independent review committee set up after Deloitte's resignation was 'dissolved' after two of the independent executive directors resigned over grievances raised by a major shareholder.
The shareholder, who has a 5 per cent stake in the company, wrote to express disagreement with the way the board had handled the company's affairs after Deloitte resigned.
The investor was also unhappy with the measures taken to resume trading of the shares, and suggested the company restructure the independent review committee.
Two independent executive directors of the company, Chan Wah-man and Alexander Cheung Hok-fung, have decided to resign from the committee.
They have also resigned from the audit committee, remuneration committee, and the nomination committee of the company.
Chan and Cheung said they needed more time to focus on their duties outside of the committees.
The company's financial adviser, Optima, which had been brought on board in April, has also resigned.
Optima said there was no disagreement with the board.
Further details on the new independent review committee, and the resumption of the stock's trading - suspended for almost three months now - have yet to be released.
Traders and investment bankers have repeatedly said the Hong Kong stock exchange should not just concentrate on being the top destination for fund-raising but also be more rigorous when it comes to approving mainland companies trying to list in Hong Kong.
'The overall sentiment has been hurt by the spate of resignations of auditors from mainland companies,' one trader said.
'Hong Kong should go for quality, not quantity, when it comes to listing matters.'
