Strong Petrochemical Holdings Ltd: Issue of Writ of Summons & Discovery of Unauthorized Payments

Key Highlights

• Discovery of Unauthorized Payments: Strong Petrochemical Holdings Limited (“Strong Petrochemical” or the “Company”) and its indirect wholly-owned subsidiary, Strong Petrochemical Limited (“Strong HK”), have discovered a series of unauthorized payments totaling HKD8,800,906. These payments were made from a Strong HK bank account between December 2024 and January 2025.
• Source and Nature of Payments: The payments were executed via cheques signed by Mr. Yao Guoliang, a former director of both the Company and Strong HK. There is no evidence of internal approval documents, service contracts, invoices, or records of services justifying these payments to several external entities (“Receiving Entities”).
• Legal Action Initiated: On 25 February 2026, the Company and Strong HK filed a writ of summons with the Court of First Instance of the Hong Kong High Court, naming Mr. Yao and Mr. Tan Xiao (another former director), as well as the Receiving Entities, as defendants. The Company alleges breach of fiduciary duties by the directors and claims the Receiving Entities were unjustly enriched.
• Claims Sought: The Company is seeking recovery of the HKD8,800,906, an account for profits, damages, equitable compensation, restitution, interest, legal costs, and any further relief as deemed appropriate by the Court.
• Continued Suspension of Trading: Trading in Strong Petrochemical shares on the Hong Kong Stock Exchange remains suspended since 9:00 a.m. on 31 December 2024, pending further notice.
• Board Changes and Governance: The unauthorized payments were uncovered following a comprehensive review of financial records after the appointment of new management on 25 January 2025. The current board comprises two executive directors, one non-executive director, and three independent non-executive directors.

Details Investors Must Know

The discovery of unauthorized payments and subsequent legal action are highly material events for shareholders and potential investors. The following points are crucial:

• Potential Financial Impact: The Company may recover the HKD8.8 million through litigation, but there is also a risk of loss if recovery is unsuccessful. Legal costs and additional compensation may further affect the Company’s financial position.
• Corporate Governance Concerns: The involvement of former directors in unauthorized payments raises serious questions about past internal controls, governance, and risk management. Investors should monitor any further disclosures regarding management oversight and remedial actions.
• Trading Suspension: The ongoing suspension of trading in Company shares is a significant issue. It impedes liquidity and may affect valuation. Shareholders are advised to be cautious and await further announcements before making trading decisions.
• Litigation Uncertainty: The outcome of the litigation is uncertain and could materially affect the Company’s financial position and reputation. Any adverse ruling or inability to recover funds may negatively impact share value.
• Regulatory and Market Sensitivity: The matters disclosed in this announcement are likely to be price-sensitive and may trigger substantial movement in share price once trading resumes.

Company’s Response and Next Steps

The Company has stated it will continue to seek legal advice and will make further announcements as appropriate to keep shareholders and investors informed of material developments. Investors should closely follow future disclosures for updates on the litigation and any possible changes to trading status.

Board Composition (as of Announcement Date)

• Executive Directors: Dr. Wang Pang Paul, Mr. Cao Xinzhong
• Non-Executive Director: Mr. Wang Jian Sheng
• Independent Non-Executive Directors: Mr. Wang Qihong, Dr. Lu Guoyang, Ms. Tam Yuk Yu

Investor Advisory

Shareholders and potential investors are strongly advised to exercise caution when dealing in the Company’s shares, given the ongoing legal proceedings, unresolved issues regarding unauthorized payments, and the continued trading suspension.

Disclaimer

The information provided above is based on a public announcement by Strong Petrochemical Holdings Limited and is intended for informational purposes only. It does not constitute investment advice or a recommendation to buy or sell any securities. Investors should consult their financial advisors and consider their own circumstances before making any investment decisions. The outcome of legal proceedings and the timing of trading resumption are uncertain and may materially affect the Company’s share price and valuation.

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