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Hong Kong bourse freezes Tianyun shares over millions of missing funds

The missing funds cost as much as $620.69m (RMB563.7m).

The Stock Exchange of Hong Kong Limited was directed to suspend dealings in the shares of Tianyun International Holdings Limited amid millions of missing corporate funds.

According to the Securities and Futures Commission (SFC), the suspension, which took effect 15 April 2024, stemmed from a probe into the alleged transfer of $37.43m (RMB34m) by a Mainland subsidiary of Tianyun in December 2021. A notice was issued on 12 April 2024 directing the suspension of dealings.

SFC said “suspending dealings in Tianyun’s shares is desirable for the purpose of maintaining a fair and orderly market and protecting the interest of the investing public.” 

SFC added that it is still investigating the matter.

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In March 2022, then-company auditor PricewaterhouseCoopers (PwC) found irregularities during its annual audit of Tianyun. It discovered a major discrepancy between internal financial records and the actual bank balance  obtained by PwC concerning a bank account maintained by the Mainland subsidiary. 

Tianyun then published announcements disclosing the matter and the findings of the forensic investigation conducted by its independent forensic accountant. The company claimed that the discrepancy was caused by an unauthorised transfer of $37.43m done by an executive of the Mainland subsidiary without informing Tianyun’s senior management.

However, SFC’s investigation showed that the transfer never took place, raising concerns about whether Tianyun had fabricated the alleged movement of funds to cover up irregularities pointed out by its then-auditor and to mislead others involved in the issue.

Upon further investigating the balances of Tianyun and its other major subsidiaries from 31 December 2019 to 30 June 2022, SFC said more issues were discovered. The missing amount ranges from $477.66m (RMB433.8m) to $620.69m (RMB563.7m).

SFC said this is 90% of Tianyun’s cash and bank balances and over 45% of the company’s net asset value in its published financial results for the past four years.

To protect shareholders, SFC said it required Tianyun to implement various immediate actions, but it failed to do so satisfactorily. 

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