Hong Kong Bourse Publicly Censures Six Former Executives of Smartphone Maker Coolpad Group
The Hong Kong Stock Exchange on Tuesday publicly censured Chinese business tycoon Jia Yueting, two former CEOs named Jiang Chao and Liu Jiangfeng, as well as three ex-directors of domestic smartphone maker Coolpad Group.
The statement asserted that if either Jia Yueting or Jiang Chao remained on Coolpad’s board of directors, their retention of office would have been “prejudicial to the interests of investors.” Jia Yueting previously founded Faraday Future, an electric car startup, and LeTV, an online streaming company. He resigned as Coolpad’s chairman in 2017.
According to the Hong Kong Stock Exchange, Coolpad provided loans or financial help with a total value of 1.3 billion yuan ($201 million) on three occasions between July 2016 and March 2017. These funds benefited either companies controlled by Jia or entities owned by people who know Jia and Jiang.
The Exchange claimed that these actions violated the HKEx rules, and that Coolpad did not announce the transactions until May 2017. Jia and Jiang failed to act honestly and in good faith in the interests of the company as a whole, or for proper purpose. The other directors mentioned previously either failed to discharge their duties in respect of the transactions, or failed to ensure that the company had implemented adequate internal controls.
The former directors other than Jia and Jiang must now attend 24 hours of training as a prerequisite for any future appointment as directors of listed companies, the statement added.
On Tuesday, Coolpad also released its most recent performance report. In the first half of the year, Coolpad’s unaudited revenue was HK $320 million ($41 million), a year-on-year decrease of 17.1%. The company’s overall gross profits dropped sharply to HK $14 million, down 117.2% year-on-year. Meanwhile, net losses reached HK $238 million.
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Coolpad explained in its financial report that the decline in gross profit was mainly due to the tightening of supply chains and the rising cost of core raw materials. At the same time, the price of mobile phones in the US market had been settled before the product debut.
The firm also said that it is still exploring the Chinese market, and that the effectiveness of reforms still needs time before it is proven.