Qunxing Paper Holdings co Ltd., manufactures and sells paper products and printing paper products.
In 2007, Qunxing issued a prospectus for an international placing and Hong Kong public offering of its shares, raising HK$1.846 billion. At the time of its listing the former Chairman and Vice-Chairman held or controlled 67% of Qunxing’s issued shares. In December 2010 and January 2011, Qunxing raised further funds from an open offer of new shares and placement.
In March 2011, trading in Qunxing’s shares was suspended after its auditors issued a disclaimer of opinion. Shortly afterwards the SFC commenced an investigation into Qunxing and identified irregularities in its financial results.
These irregularities included a material overstatement of sales by Shandong Qunxing in Qunxing’s prospectus, annual results and results announcements between 2007 and 2011. Certain documents provided by Qunxing to its auditors concerning the alleged sales were also found to be fictitious, and that persons who had been held out to the auditors as employees of a customer of the business were not in fact employed by the customer. Qunxing’s annual reports and results announcements issued between 2009 and 2012 also failed to disclose the bank borrowings of the group, which were between four and 14 times the stated liabilities of the group at the end of the relevant periods.
1 Securities and Futures Commission: The SFC’s ability to obtain restoration orders under the SFO following the Qunxing Paper Case, 2018
Qunxing: Annual Report, 28 Mar 2008