Changjiang Fertilizer chairman’s leave of absence and where the all-important legal seals were held prompt queries; Firm ‘unable to take a view’ whether chairman’s ‘personal matters’ will affect his character and integrity as a director

http://www.businesstimes.com.sg/companies-markets/changjiang-fertilizer-chairmans-leave-of-absence-prompts-queries

Posted by John SOH Yong Ye, Year 4 undergrad at the School of Economics, Singapore Management University

Changjiang Fertilizer chairman’s leave of absence prompts queries

Jamie Lee

5 March 2015

Business Times Singapore

Firm ‘unable to take a view’ whether chairman’s ‘personal matters’ will affect his character and integrity as a director

CHANGJIANG Fertilizer Holdings – which shut down production for all of last year – on Wednesday announced that it has been queried by the Singapore Exchange (SGX) over the leave of absence taken by its executive chairman, Cai Jian Hua. The concerns, as put forth in the regulatory announcement, related to the details behind the “personal matters” that led to his six-month leave, and where the all-important legal seals were held.The company said in February that Mr Cai was taking a leave of absence from his duties for a period of six months from March 1, 2015, to Sept 1, 2015 “to sort out his personal matters”.

Changjiang Fertilizer said that it did not have “further definitive details” on Mr Cai’s “personal matters”.

When asked by SGX if these issues would impact his “character and integrity as a director of the company”, the company could only say that it was “unable to take a view at this point in time”.

“The company is given to understand that Mr Cai is currently not in the position to fulfil his duties as executive chairman and executive director of the company as he is currently unable to commit sufficient time and resources towards overseeing the business and affairs of the company in this capacity,” said Changjiang.

It added that Mr Cai was not involved in the daily operations of the company, and that the leave of absence “will not have any negative impact on the business or operations”.

“The company is not aware of any circumstance indicating that Mr Cai’s personal matters are in any way connected with the business and operations of the company.”

SGX further queried the company on who has “custodian and authorisation of various seals” to access assets of the company.

In response, Changjiang said that the assets of the group in China are managed by acting chairman Zhu Xue Cheng. Deputy CEO and executive director Zhu was given the task of acting chairman when the group announced Mr Cai’s leave of absence in February.

“Each subsidiary’s legal representative seal (where applicable) is kept by the relevant subsidiary’s office supervisor. Each subsidiary’s finance seal (where applicable) is kept by the relevant subsidiary’s finance manager,” it said. It added that Mr Cai is not a legal representative of any entity within the group.

The group posted zero sales in 2014, reflecting “no production” in all of its three plants last year.

In particular, its Miluo and Xiangyin plants have received notifications from the government to cease their operations in the existing factories which are located in urban areas of the cities for the purposes of the re-development of the cities, it said. It has a third plant in Hanshou.

“As such, production in these two plants have been halted and the financial results of the subsidiaries of these two plants are classified under ‘discontinued operations’.”

Full-year group net loss for 2014 was 221 million yuan (S$48 million), including 136.7 million from discontinued operations. For 2013, the net loss was 320.4 million yuan, including 239.3 million yuan from discontinued operations.

The allowance for impairment of property, plant and equipment in FY2014 was about 117 million yuan, against about 249 million yuan in FY2013.

Net assets stood at 1.62 million yuan as at Dec 31, 2014, versus 221.4 million a year earlier. In per-share term, net asset value was 0.45 fen, against end-2013’s 61.51 fen.

“The company is in the midst of reviewing its business continuity plans as well as continuing with the respective local governments on related compensations,” it added in its financial statement, which was made public on Feb 28.

Shares of Changjiang Fertilizer last traded at S$0.019 on March 3.

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