A company that claimed it was the biggest metal recycling company in China may be wound up by the Hong Kong Securities and Futures Commission (SFC).
China Metal Recycling (Holdings) Limited was listed in Hong Kong and its shares were suspended on 28 January 2013 following accusations that it had elaborated the size of its business. On 28 March 2013, the company was given the conditions for resumption of trading conditions on the Hong Kong stock exchange but these conditions have yet to be satisfied.
The SFC has applied to the court to wind up the company in the interests of the company’s shareholders, creditors and the investing public.
Cosimo Borrelli and Jocelyn Chi Lai Man of Borrelli Walsh Limited have been appointed as joint and several provisional liquidators for China Metal Recycling.
In a statement, the SFC said: “These applications follow an SFC investigation that found evidence suggesting that China Metal Recycling has overstated its financial position in the prospectus used for its initial public offering in 2009 and in its annual report for 2009.
“The SFC alleges that this was achieved by inflating the size of the company’s business and the amount of revenue generated by its major subsidiary. The SFC alleges that an overwhelming majority of the subsidiary’s purported purchases from its three major suppliers for the financial years ended 31 December 2007, 2008, and 2009 were fictitious by escalating amounts in each successive year.
“The SFC’s investigation also found evidence showing that the suspected exaggeration of China Metal Recycling’s financial situation remains a current issue that would affect its 2012 financial results, which to date remain unissued.”
China Metal Recycling will be given the opportunity to put its side at a court case on 2 August 2013.
The company continues to say it is the largest scrap metal recycler in China based on its revenue of 2008 on its website. It adds that is has scrap metal recycling facilities in Guangdong Province, Jiangsu Province and Hong Kong.
It says that it buys material from both overseas and domestic sellers.