The Hong Kong Securities and Futures Commission has obtained Court of First Instance disqualification orders against four former directors of China Candy Holdings Limited, barring them from acting as directors or otherwise being involved in the management of Hong Kong corporations for up to 33 months. The action relates to their negligence in failing to detect and address materially overstated financial records at the company. The SFC’s investigation found that China Candy’s 2016 interim and annual reports overstated cash and bank balances by 87% and 97% respectively, and that bank and accounting records had been fabricated to conceal the misstatements. Former executive directors and chairpersons Yvonne Hung and Li Yuna were disqualified for 33 months and 24 months respectively, while former independent non-executive directors Fangus Chu Wai Wa and Ong King Keung were each disqualified for 12 months. All four were also ordered to pay the SFC’s costs. Internal control review reports prepared by external professionals in 2015 and 2016 had identified issues including discrepancies in cash counts, the absence of petty cash records, and inconsistencies in monthly management accounts and bank reconciliations. The directors admitted they had relied on external professionals to identify red flags, but failed to scrutinise those findings or verify whether remedial measures had been implemented. The orders form part of the SFC’s wider legal action against former directors and the ex-financial controller of China Candy. Separate proceedings against former chairman Xu Jinpei, former chief executive officer Hong Yinzhi and former chief financial controller Wang Zhihong were concluded in March 2026, and judgment is pending.
Hong Kong Securities & Futures Commission 2026-05-07
Hong Kong Securities and Futures Commission secures China Candy director disqualifications of up to 33 months over failures to uncover financial overstatements
The Hong Kong Securities and Futures Commission has secured Court of First Instance disqualification orders of up to 33 months against four former directors of China Candy Holdings Limited for negligence in failing to detect and address materially overstated financial records. China Candy’s 2016 interim and annual reports overstated cash and bank balances by 87% and 97% respectively, using fabricated bank and accounting records to conceal the misstatements, and the directors did not adequately act on internal control red flags identified by external professionals. The orders form part of wider legal action against former directors and the ex-financial controller, with separate proceedings against three other former senior executives concluded and judgment pending.