NutryFarm International: Independent Review Reveals Major Issues in Acquisition Transactions and Internal Controls

FTI Consulting Report Uncovers Serious Internal Control Weaknesses, Potential Listing Rule Breaches, and Significant Risks to Shareholder Value

Singapore, 11 December 2025 – NutryFarm International Limited (“NutryFarm”), a Mainboard-listed company on the Singapore Exchange, has released an executive summary of an extensive independent review conducted by FTI Consulting. The review scrutinizes NutryFarm’s dealings and internal controls around two proposed acquisitions between 2017 and 2021 and related advance payments to Chengdu Meili Tianyuan Agriculture Co., Ltd (“MLTY”). The findings raise significant concerns regarding compliance, governance practices, and the potential for substantial financial losses that may impact the company’s share value.

Key Findings of the Independent Review

1. Major Transactions With Serious Internal Control Weaknesses

• Substantial Funds Advanced Without Adequate Safeguards: NutryFarm advanced a total of RMB 77,249,989 (HKD 91.4 million) to a vendor (Mr. Wang Xiaoxin and his associates), well before the completion of the First Proposed Acquisition. Notably, HKD 53.4 million was disbursed even prior to the execution of the sales and purchase agreement or the completion of due diligence and independent valuation.
• Payments Made to Unknown Third Parties: Significant portions of the funds were paid to individuals and entities (Ms. Feng Jiachen and Grand Majestic Holdings Ltd) who were not parties to the main agreements, without written confirmation or clear evidence of their roles. These payments, later acknowledged by the vendor, represented a major lapse in financial controls.
• Interest-Free Loans Despite Third-Party Borrowing Costs: The company borrowed funds at interest rates ranging from 3.5% to 7.4% per annum to finance interest-free advances to the vendor, incurring significant costs without assured returns.
• Missing Board Approvals and Delayed Disclosures: Board resolutions for these major transactions were either missing or passed after the funds had been advanced. Disclosure of these material transactions to the market was delayed by more than two years, with the first public announcement made only in December 2019.

2. Potential Listing Rule Breaches and Fiduciary Failings

• Multiple Breaches of SGX Mainboard Rules: The review identified potential breaches, including failure to disclose material transactions, inadequate internal controls, and possible failures in discharging fiduciary duties. These issues expose the company and its directors to regulatory sanction and further erode market confidence.
• Questionable Approval and Escalation Processes: There was no evidence that the Board approved the disbursement of funds before they took place. Approvals for loan agreements and prepayments were often obtained post-event, undermining governance and accountability.
• Unclear Recovery of Funds: Despite the termination of the acquisitions and the negotiation of repayment agreements, as of March 2022, NutryFarm had not fully recovered the advanced funds, with approximately HKD 59.8 million still outstanding from the vendor.

3. Incomplete Due Diligence and Lack of Documentation

• Due Diligence Commissioned Too Late: Professional financial and legal due diligence was only commissioned in late 2017, six months after substantial funds had already been paid to the vendor.
• Poor Documentation and Use of Personal Emails: Company staff used personal email accounts for corporate correspondence, leading to the risk of data loss and poor record-keeping, especially during staff turnover.

4. Advance Payments to MLTY Raise Further Concerns

• Advance Payments Without Clear Commercial Justification: Between 2019 and 2021, NutryFarm’s subsidiary NFC advanced up to RMB 37 million (~HKD 42.7 million) to MLTY under two interest-free loan agreements. There were no trade transactions between the parties after 2018, and these advances appear not to be in the ordinary course of business.
• No Board Approval or Timely Disclosure: These loans were approved only at the subsidiary level, with no escalation to the NutryFarm Board or timely disclosure to shareholders. The amounts involved represented approximately 30% of the group’s net assets as of end-2018.
• Inconsistent Reporting: There were discrepancies (up to RMB 2.8 million) between figures reported to SGX and those in NFC’s ledger, raising questions about the reliability of financial disclosures.

5. Governance and Shareholder Impact

• Resignations and Lack of Continuity: Several directors were uncontactable or did not participate in the review. Key staff departures and lack of proper handover further weakened governance.
• Judicial Management and Unauthorised Asset Disposal: The company was placed under judicial management in June 2022. After this, NutryFarm’s subsidiary NFC was apparently disposed of without the judicial manager’s authorization, meaning the company lost visibility over the recovery of outstanding loans and advances.

Implications for Shareholders and Market Value

The findings of the FTI Consulting review are highly material and potentially price sensitive:

1. Significant financial losses are possible if the remaining refundable deposits and advances are not recovered.
2. Potential regulatory sanctions for breaches of SGX listing rules and poor governance could further damage company reputation and investor confidence.
3. Shareholder value may be at risk due to the lack of clarity on asset recoverability, especially after the disposal of NFC post-judicial management.
4. The report raises fundamental questions about the Board’s ability to safeguard shareholders’ interests, ensure effective internal controls, and provide timely, accurate disclosures to the market.

Recommendations and Remedial Actions

• NutryFarm should immediately establish robust internal controls, including approval matrices, corporate email systems, and clear escalation protocols for material transactions.
• All significant loans and advances must be approved by the Board and disclosed to shareholders in a timely and transparent manner.
• NutryFarm should seek to recover all outstanding funds and ensure proper documentation of all transactions, including any future asset disposals.
• The company must review and strengthen its governance framework to comply fully with SGX rules and best practices.

Conclusion

The independent review by FTI Consulting has exposed critical failures in oversight, disclosure, and internal controls at NutryFarm International. These issues are likely to have a direct bearing on shareholder value and may trigger regulatory action or further financial losses if not urgently addressed. Investors are strongly advised to monitor the company closely for remedial actions and further updates from the Board and SGX RegCo.

Disclaimer: This article is based on the executive summary and findings of the independent review conducted by FTI Consulting for NutryFarm International Limited. It is intended for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The author and publisher accept no liability for any losses arising from reliance on this information.

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