SFC obtains 13-year disqualification orders against former top executives of China Candy Holdings Limited for corporate malfeasance

On August 06, 2026, the Securities and Futures Commission ("SFC") obtained 13-year disqualification orders in the Court of First Instance against three former top executives of China Candy Holdings Limited for corporate malfeasance. The three former top executives are: Mr Xu Jinpei, former chairman and executive director; Ms Hong Yinzhi, former executive director, chief executive officer and compliance officer; and Mr Wang Zhihong, former chief financial controller and compliance officer. Under the orders, they are prohibited, without leave of the Court, from acting as directors, liquidators, receivers or managers of the property or business of any listed or unlisted corporation in Hong Kong for 13 years.

Findings on Financial Misstatement and Fraud

The Court found that China Candy’s reported cash and bank balances in its 2016 interim report and annual report were overstated by RMB38.1 million and RMB43.48 million, respectively, amounting to 87% and 97% of the reported balances. It concluded that these overstatements were not mere accounting errors, but part of an inflation scheme enabled by fictitious deposits, unrecorded transactions, and offsets after the reporting cut-off dates. These deceptions were concealed through the falsification of bank slips, bank statements, and accounting vouchers.

Specific Roles and Audit Circumvention

In particular, the Court found that China Candy created the false appearance of substantial cash holdings by recording fictitious deposits shortly before reporting cut-off dates and reversing them shortly thereafter. Mr Xu, Ms Hong and Mr Wang held senior roles in China Candy’s management, finance and compliance functions, placing them in a position to instigate, permit, acquiesce in or perpetuate the schemes. Ms Hong was directly connected to the schemes as the purported payer or recipient in 85 of 116 non-recorded transactions and 30 of 57 non-existent transactions. Mr Wang was responsible for recording falsified vouchers, and bank slips, which were arranged by him and/or staff working under his supervision. The inflation and falsification schemes were designed to circumvent standard audit oversight, including supplying falsified financial information to China Candy’s auditor for its interim review and annual audit.

SFC Enforcement Stance and Case History

The SFC’s Executive Director of Enforcement, Mr Michael Duignan, stated that accurate corporate financial reporting is fundamental to market integrity and investor confidence. Senior executives, including finance professionals who are not directors, will be held accountable for misdeeds involving falsifying records, distorting financial statements, facilitating misconduct, or turning a blind eye to serious irregularities. Notes indicate China Candy’s shares were listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited on 11 November 2015 (former stock code: 8182). The listing of its shares was cancelled with effect from 31 December 2019. The SFC commenced proceedings under section 214 of the Securities and Futures Ordinance in May 2022. The Court also ordered Mr Xu, Ms Hong and Mr Wang to pay the SFC’s costs in the proceedings. In September 2023 and March 2026, the SFC obtained disqualification orders in the same proceedings against former executive directors Ms Yvonne Hung and Ms Li Yuna, who were also chairpersons, for 33 months and 24 months respectively, and former independent non-executive directors Mr Nicholas Chiu Sai Chuen, Mr Ong King Keung and Mr Fangus Chu Wai Wa for 36 months, 12 months and 12 months respectively. The judgment is available on the Judiciary’s website (Case No. HCMP 572/2022).