CHINA AOYUAN (03883.HK): HKEX Censures Former Independent Non-Executive Director Xu Jinghui and Requires 17 Hours of Compliance Training

NewTimeSpace News: On 11 August 2026, The Stock Exchange of Hong Kong Limited published a disciplinary action statement censuring Mr. Xu Jinghui, former independent non-executive director of China Aoyuan Group Limited (stock code: 03883.HK), and directing him to complete 17 hours of training on regulatory and legal topics and Listing Rules compliance matters, including two hours on Rule 2.13 of the Listing Rules and three hours each on (i) directors' duties and (ii) the Corporate Governance Code.

Mr. Xu served as an independent non-executive director of China Aoyuan and a member of its audit committee from September 2007 to January 2023. China Aoyuan was listed on the Main Board in October 2007 and is engaged in property development in China. In March 2019, China Aoyuan spun off its subsidiary Starjoy Wellness and Travel Company Limited (stock code: 03662.HK) for a separate listing on the Main Board; Starjoy remained a consolidated subsidiary of China Aoyuan after the listing, with China Aoyuan continuing as its controlling shareholder until it disposed of its controlling interest in July 2023. Trading in the shares of China Aoyuan and Starjoy has been suspended since 1 April 2022 for more than 16 months, as the companies failed to resolve audit issues concerning the commercial substance and commercial rationale of fund flows between them, resulting in their failure to publish the annual results for the financial year ended 31 December 2021 on time.

The independent investigations found that, during the period from 1 January 2021 to 31 March 2022, the Starjoy group provided financial assistance totaling RMB 3.3 billion to the China Aoyuan group through 147 transactions (fund transfers), which were not approved or known to the boards of the companies and did not comply with the applicable announcement, circular and independent shareholders' approval requirements under the Listing Rules. The fund transfers were implemented and arranged by China Aoyuan's financial fund center, with Mr. Guo Zining, then executive director of China Aoyuan and non-executive director of Starjoy, being the ultimate decision-maker and approver, and 118 of the 147 transfers approved by Mr. Chen Zhibin, then non-executive director of Starjoy and/or executive director and chief financial officer of China Aoyuan. The investigations also found material deficiencies in the internal controls, measures and processes of the fund management function, including policies that were not reviewed or updated, the absence of effective processes to identify and manage conflicts of interest and notifiable transactions, and the lack of a centralized document retention policy.

The Listing Committee found that Mr. Xu failed to act with the requisite skill, care and diligence and failed to procure the Group to put in place adequate internal controls, measures and processes during the relevant period, in breach of Rule 3.08 of the Listing Rules. The investigations did not show that Mr. Xu was aware of or involved in the fund transfers; however, the Listing Committee considered that, as an independent non-executive director and audit committee member, Mr. Xu failed to take an active interest in the operation of the fund management function and failed to take sufficient action to assess the risks and the adequacy of internal controls in light of the spin-off listing of Starjoy. The Exchange confirmed that the sanctions and directives apply only to Mr. Xu and not to any other former or current directors of China Aoyuan or Starjoy.

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