Greentech Technology International Limited – Key Findings of Independent Investigation

Major Developments and Price-Sensitive Information for Investors

Greentech Technology International Limited (“Greentech” or “the Company”) has released the key findings of an independent investigation into several incidents that led to the suspension of its shares on the Hong Kong Stock Exchange. This announcement contains critical information for shareholders and potential investors, as it addresses issues that directly affect the Company’s governance, internal controls, and financial integrity.

1. Background and Trading Suspension

• Trading in Greentech shares has been suspended since 2 September 2024 due to delays in publishing the 2024 Interim Results.
• The delays were triggered by the need for further information related to several incidents, including a disputed loan repayment to a major shareholder (Cybernaut), an investment in a Singapore-based fund (DH Fund No. 1), and an investment in an associate company (Alyson Holdings Limited).
• These issues prompted a forensic investigation mandated by the Stock Exchange as part of the resumption guidance.

2. Scope and Process of the Independent Investigation

• An Independent Committee was set up, and Acclime Corporate Advisory (Hong Kong) Limited was appointed as the Independent Investigator.
• The investigation included interviews, site visits, data reviews, and company searches.
• Key limitations were identified, notably management’s delay in providing information to directors, which was deemed a corporate governance issue outside the direct scope but flagged for further action.

3. Key Findings – Cybernaut Loan Repayment

• Background:
  • Company repaid a HK\$67.1 million loan to Cybernaut, a major shareholder, but the repayment was made to the personal account of Ms. Wang, a director of Cybernaut, based on her payment instructions.
  • Concerns were raised by other directors about the legitimacy of paying a personal account, lack of board approval, and possible internal control failures.
• Investigation Outcome:
  • Repayments to personal/third-party accounts had been the Company’s past practice due to Cybernaut’s inability to open a Hong Kong corporate account.
  • After two years of dispute, a joint board resolution from Cybernaut confirmed the repayment was valid and settled all obligations.
  • No evidence was found of conspiracy to defraud or improper conduct; the issue was deemed an internal matter for Cybernaut.
  • However, the case highlighted serious weaknesses and ambiguities in the Company’s internal controls and approval processes.

4. Key Findings – Investment in DH Fund No. 1 (Singapore)

• Background:
  • In March 2022, Greentech invested US\$6.3 million in DH Fund No. 1, managed by DH Capital in Singapore, expecting a 6–8% annual return.
  • The investment was approved by the Board, but some directors abstained due to insufficient due diligence and high risk.
• Post-Investment Issues:
  • The fund defaulted on interest payments soon after subscription, resulting in an impairment loss of HK\$13 million in the 2023 accounts.
  • The Company failed to execute a formal redemption at the end of the 12-month period due to lack of board resolution and internal procedures.
  • Greentech was the only investor in the fund, and no investment committee or formal investment controls existed in the Company.
• Price Sensitive:
  • The significant impairment loss and inability to recover the investment may have a direct impact on the Company’s net asset value and future cash flows.

5. Key Findings – Investment in Alyson Holdings Limited (Associate)

• Background:
  • In November 2022, the Company invested up to HK\$10.2 million in Alyson Holdings (33% stake) and provided shareholder loans.
  • Alyson’s subsidiary held SFC licenses but had no business, staff, or office, raising concerns about the commercial rationale for the investment.
  • Other Alyson shareholders did not contribute additional capital or loans.
• Findings:
  • No internal controls or formal policies governed investments in associates. The Board did not formally approve the transaction as it fell below size thresholds, but directors disagreed over whether Board approval was required.
  • HK\$3 million of the loan has been repaid following the surrender of SFC licences in 2025, but the Company wrote off the investment due to persistent losses and lack of progress.
  • No evidence found of improper personal benefit to management from the associate.
• Price Sensitive:
  • The full write-off of the investment reduces the Company’s asset base and reflects failed strategic expansion, possibly affecting investor confidence.

6. Internal Control and Corporate Governance Issues

• The investigation found that the Company:
  • Lacks a complete internal control system and detailed process guidelines for major corporate actions.
  • Has no formal policies for investment decision-making, loan approvals, or investments in associates.
  • Has no investment committee or specialist oversight of financial investments.
  • Experienced significant boardroom division and governance deadlock, with disputes over the CEO’s management authority.
• These issues are highly material and price sensitive, as they expose the Company to operational, financial, and regulatory risks, and may affect future business performance and stock market confidence.

7. Remedial Actions and Recommendations

• The Independent Committee and Board have accepted the investigation’s findings and committed to a series of urgent remedial measures:
  • Development and enforcement of comprehensive written internal control procedures, especially for investment, loan, and payment approvals.
  • Segregation of duties and independent oversight for major fund usage.
  • Mandatory due diligence for all investments, including financial, legal, and compliance checks.
  • Regular investment performance reviews and formal reporting to the Board and Audit Committee.
  • Recruitment of internal control experts and enhanced staff training on risk and compliance.
  • Improvements to document retention and approval practices.
• The Company remains in trading suspension until all resumption guidance from the Stock Exchange is fulfilled, including implementation of the recommended internal control improvements and publication of further updates.

8. Overall Conclusion and Potential Share Price Impact

• No evidence of fraud or dishonesty was found among current or former directors or senior management regarding the investigated incidents.
• However, the investigation exposed deep-seated internal control and governance weaknesses, disputed authority, and investment losses—all of which are highly material for investor decision making.
• Successful and credible implementation of remedial actions will be crucial for share price recovery and market confidence once trading resumes.
• Shareholders should monitor the Company’s announcements closely and exercise caution in trading decisions.

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