Raffles Interior Limited Issues Critical Update on 2025 Annual Audit Progress Amid Integrity Concerns Surrounding Executive Director

Summary

Raffles Interior Limited (“the Company”, Stock Code: 1376) has released a significant inside information announcement regarding the progress and uncertainty of its 2025 annual audit. The report centers on unresolved integrity issues relating to Mr. Zheng Nenghuan, the Company’s executive Director and controlling shareholder. The ongoing situation has raised serious concerns about audit completion, corporate governance, management integrity, and the Company’s ability to comply with regulatory requirements—each of which could materially impact share value.

Key Points and Detailed Developments

• Unauthorized Transactions & Trading Halt:
  • Mr. Zheng entered into an unauthorized Sale and Purchase Agreement for a very substantial acquisition worth HK\$300 million.
  • Mr. Zheng unilaterally instructed a halt in trading of Company shares on 4 November 2025, raising suspicions over market conduct and potential breaches of securities laws.
• Financial and Legal Disputes:
  • A Demand Letter was received outlining Mr. Zheng’s potential failure to fulfill payment obligations, which may lead to the claimant exercising Disposition Rights against his assets, potentially affecting his shareholding in the Company.
  • Multiple complaint letters were received, alleging conspiracy to defraud minority shareholders, questioning the valuation of the Target Asset, and raising concerns about undeveloped assets with possibly inflated contracted prices.
  • External auditors expressed concerns about management integrity and heightened risk profiles due to these allegations.
  • Reports surfaced showing 100 counts of court disputes/litigations involving Mr. Zheng, his spouse, and related entities, mostly concerning financial loan disputes, share transfers, personal loans, and guarantees spanning from 2014 to 2025.
• Governance Turmoil:
  • Resignation of independent non-executive Director and previous chief financial officer, with reasons including disagreement and dissatisfaction with new Board leadership.
  • Mr. Zheng as controlling shareholder requested removal of all other Directors, including all independent non-executive Directors, raising the risk of a Board overhaul.
  • Formation of an Independent Board Committee (IBC) to investigate specific allegations.
  • Temporary suspension of Mr. Zheng’s executive duties.
  • Receipt of injunctive orders and legal notices involving Mr. Zheng.
  • Allegations of PRC foreign exchange violations and improper asset transfers.
  • Company’s breach of certain Listing Rules due to Director resignation.
• Audit Committee and External Auditor Concerns:
  • Audit Committee met with external auditors on 12 February 2026, discussing status updates from the IBC and audit progress.
  • External auditors highlighted unresolved integrity concerns around Mr. Zheng and several ongoing litigations, including his originating summons against the Company.
  • Auditors expanded their scope of work, especially regarding related-party transactions, internal controls, and corporate governance, warning that this will delay audit completion.
  • If the IBC investigation is not concluded with conclusive evidence, auditors will likely not express an audit opinion (even if qualified), potentially preventing publication of the 2025 Audited Annual Results.
  • Concern over the Group’s ability to continue as a going concern due to the pervasive impact of management integrity issues.
• Potential Suspension of Trading:
  • If the Company fails to publish its audited annual financial results by 31 March 2026, trading in its shares may be suspended under Rule 13.50 of the Listing Rules.
  • Company is actively working with auditors and seeking Mr. Zheng’s cooperation to complete the internal investigation and audit, but lack of cooperation is a major risk.

Price Sensitive Implications for Shareholders

Shareholders should note:

• There are unresolved integrity and governance issues at the highest level of the Company, involving the controlling shareholder and executive Director.
• Audit completion and publication of 2025 results are at risk, which is a direct trigger for potential suspension of trading in shares.
• Multiple legal disputes, allegations of fraud, potential regulatory breaches, and Board instability could significantly affect shareholder value and market perception.
• Any inability to resolve these matters in a timely manner may result in regulatory action, including suspension, which would materially impact share liquidity and value.

Next Steps and Ongoing Efforts

The Company will continue efforts to facilitate audit completion, including seeking cooperation from Mr. Zheng and other Directors. Further announcements will be published as material developments arise. Shareholders and potential investors are strongly advised to exercise caution when dealing in the shares of the Company.

Corporate Leadership Status

As of 16 February 2026: Mr. Zheng Nenghuan’s duties are suspended. Executive directors are Mr. Ding Hing Hui and Ms. Loke Pui San. Independent non-executive directors are Mr. Wong Heung Ming Henry (Acting Chairman) and Mr. Chan Chi Keung, Alan.

Disclaimer

The information provided above is based on official company announcements and may be subject to change as investigations and audits progress. Investors should monitor future disclosures and consult professional advisors before making any investment decisions. This article does not constitute investment advice.

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