SGX RegCo calls Midas Holdings' executives to resign

It found that executive officers made guarantees for the company’s illegal bonds and hid related lawsuits.

The Singapore Exchange Regulation (SGX RegCo) called to axe the appointment of aluminium alloy manufacturer Midas Holdings' executive chairman Chen Wei Ping and executive officer Ma Ming Zhang over undisclosed lawsuits and illegal bonds and guarantees.

According to an announcement, SGX RegCo has "concerns about the suitability" of the two continue in their positions. It recommended Midas Holdings to object to Chen and Ma’s continuing appointment within the three years after it issued its announcement.

SGX RegCo also updated on the other persons named in its previous announcements. Patrick Chew has resigned as CEO, whilst the lawyers of its subsidiary companies, Sun Qi Xiang and Yang Xiao Guang, have been replaced.

According to the announcement, SGX RegCo found out that there were undisclosed enforcement orders against the Midas Holdings’s subsidiaries in the People’s Republic of China (PRC). There was an enforcement order against its subsidiary Jilin Midas (JM) amounting to RMB30m. About RMB12m in RMB873m of its PRC subsidiaries’ unaudited ledger balances were frozen by court orders, amongst others.

SGX RegCo also noted that JM took out unauthorised loans worth RM379m even if the supposed lender did not exist in its accounts. Shares in Midas Holdings subsidiaries were pledged for the loans. “The audit committee could not establish what happened to the proceeds of the JM loans,” said SGX RegCo listing compliance head June Sim.

Another subsidiary, JM Light Alloy (JMLA), also took out unauthorised loans worth RMB30.5m in 2016 even if the lender did not exist in Midas Holdings’ accounts. Moreover, these JMLA loans contained the signatures of Chen, Chew, and JMLA officer Li Hui as guarantee.

Additionally, two other subsidiaries, Luoyang Midas and Dalian Huicheng, provided an unauthorised corporate guarantee for all the debts owed by a company not related to Midas Holdings but owned by Chen’s nephew Chen Chen. These signatures of Chew and Yang were affixed to these guarantees.

“The audit committee noted that the unauthorised guarantees did not benefit the group,” Sim said.

Moreover, when Midas Holdings and its subsidiaries were sued by third parties, Ma, as a legal representative, did not report the lawsuits of the company to the board of directors.