Wai Chun Bio-Technology Limited has issued a circular detailing a previously unannounced series of drawdowns totalling RMB31.05 million (USD4.34 million) that its 51%-owned subsidiary Weifang Century-Light Biology Science Co. provided to independent third-party Grain Mills (Shandong) Food Ingredients under a loan agreement signed on 29 September 2022.
The facility carries 3.95% interest per annum, is unsecured and repayable on demand. Drawdowns amounted to RMB24.30 million during the financial year ended 30 June 2024 and RMB6.74 million in FY2025. All principal and interest were fully settled in May 2025.
Because the outstanding balances at various points exceeded the thresholds under Chapters 13 and 14 of the Hong Kong Listing Rules, 35 of the drawdowns should have been classified as major transactions and three as discloseable transactions; one drawdown also constituted an advance to an entity. The company failed to make timely disclosures, leading to breaches of the Listing Rules.
The board attributes the lapses to inadequate monitoring systems at subsidiary level and high staff turnover in the finance function. Remedial actions include: 1. Appointment of a new chief financial officer; 2. Standardised checklists with automated size-test calculations and a lowered internal reporting threshold of RMB2 million; 3. Monthly loan-transaction reviews and enhanced presentation of management accounts; 4. Two compliance training sessions held in January and February 2026 for directors and finance staff.
The loan was intended to support the borrower’s RMB50 million factory development programme and to cultivate Grain Mills as a major customer. Sales from Wai Chun Bio-Tech to the borrower rose from RMB6.10 million in FY2024 to RMB31.90 million in FY2025.
An extraordinary general meeting will be convened on 20 April 2026 at 3:00 p.m. in Hong Kong to seek shareholder approval for the loan agreement, all drawdowns and the remedial steps taken. The register of members will be closed from 15 April to 20 April 2026 inclusive.
The board considers the loan terms fair and believes the transactions are in the interests of the company and its shareholders. No shareholder is required to abstain from voting at the EGM.