Exchange’s Disciplinary Action against Fantasia Holdings Group Co., Limited (Stock Code: 1777), Colour Life Services Group Co., Limited (Stock Code: 1778) and Nine Directors

香港聯合交易所有限公司
(香港交易及結算所有限公司全資附屬公司)
THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)

The Stock Exchange of Hong Kong Limited

CENSURES:
1. Fantasia Holdings Group Co., Limited (Stock Code: 1777);
2. Colour Life Services Group Co., Limited (Stock Code: 1778);

IMPOSES A PREJUDICE TO INVESTORS’ INTERESTS STATEMENT and CENSURE against:
3. Mr Pan Jun, former chairman, chief executive officer and executive director of Fantasia and Colour Life;

CENSURES:
4. Mr Chen Xinyu, former executive director of Fantasia and Colour Life;
5. Ms Zeng Jie, Baby, non-executive director and former executive director of Fantasia;
6. Mr Ke Kasheng, former executive director of Fantasia;
7. Mr Zhang Huiming, former executive director of Fantasia;
8. Mr Guo Shaomu, independent non-executive director of Fantasia;
9. Mr Wu Qingbin, former non-executive director of Colour Life;
10. Mr Xu Xinmin, former independent non-executive director of Colour Life; and
11. Mr Zhu Wuxiang, former independent non-executive director of Colour Life,

AND FURTHER DIRECTS:
each of the above directors, except Mr Pan, to attend training.

The Prejudice to Investors’ Interests Statement is a statement that, in the Exchange’s opinion, the occupying of the position of director or senior management of the companies or any of their subsidiaries by Mr Pan may cause prejudice to the interests of investors.

This matter concerns the circumvention of Listing Rule requirements by Fantasia and Colour Life in respect of a very substantial disposal.

The companies intended to dispose of a subsidiary, Link Joy, in order to relieve imminent liquidity concerns. Two days after entering into a share transfer agreement with the purchaser of Link Joy, Colour Life entered into a short-term (4-day) loan agreement with the purchaser, and used its interest in Link Joy as security for the loan. Colour Life failed to repay the loan when due. The purchaser requested, as it was entitled under the loan agreement, the transfer to it of Link Joy. In effect, the companies disposed of Link Joy unbeknownst to their shareholders, and without obtaining shareholders’ approval as required under the Listing Rules.

Mr Pan admitted that he was solely involved in the negotiation and execution of the loan, and the decision to default on the loan by Colour Life. He disregarded the internal control policies of the companies, which led to the companies’ Listing Rule breaches.

The other directors became aware of the loan and the forced transfer of Link Joy shortly after the transfer of Link Joy had taken place. Whilst some members of the boards of Fantasia and Colour Life (who are not involved in this action) raised concerns, the directors censured in this action did not make any enquiries or seek further information from Mr Pan about the transactions or the companies’ Listing Rule compliance, as they considered, amongst others, that the companies required urgent financing at the time. They also failed to question Mr Pan’s conduct, including why Mr Pan kept the loan agreement to himself and ignored the applicable internal control policies.

Ends