Sinco Pharma reveals internal control issues, commits to fixes

Sinco Pharmaceutical Holdings Limited (Sinco Pharma) has released key findings from an internal control review conducted by consultants. The review, prompted by prior announcements regarding an interest-free loan of HK$5 million to Mr. Huang Xiangbin, identified several deficiencies, particularly in corporate governance and treasury management. The board has acknowledged and concurred with the findings and recommendations, committing to implement remedial actions by October 2025.

Key findings include breaches of listing rules regarding connected transactions, specifically the HK$5 million loan, and non-compliance with the company's articles on providing loans to connected persons. Sinco Pharma also failed to maintain written records for connected persons list reviews and circulation, and lacked clear guidance for disclosing notifiable transactions. The consultants recommended designating personnel for calculating percentage ratios, strictly complying with the company's articles, and regularly updating and distributing a connected persons list.

In treasury management, issues such as incomplete approval records for loan agreements, deficiencies in financial management policies (including cash advances and bank account processes), and cash payments without payee signatures were identified. Sinco Pharma's management has accepted all recommendations, which include establishing clear payment approval authority, implementing formal frameworks for related-party transactions, and improving record-keeping for cash advances and bank account operations.