The Securities and Futures Commission (SFC) has directed The Stock Exchange of Hong Kong Limited (Stock Exchange) to suspend dealings in the shares of Dashan Education Holdings Limited (Dashan) under the Securities and Futures (Stock Market Listing) Rules (SMLR), effective from 9:00 am on 3 December 2025 (Notes 1 and 2).
The SFC took this action because it considers that suspending dealings in Dashan’s shares at this stage is desirable to maintain a fair and orderly market and to protect the interest of the investing public while the SFC continues its investigation.
Dashan’s shares were suspended for trading on 30 March 2023 after the company’s former auditor identified certain audit matters in relation to, amongst others, its software development project between April 2022 and November 2023 (Software Development) and its acquisition of a UK-based company in September 2022 (UK Acquisition). Trading in Dashan shares resumed in September 2024, following an investigation by Dashan and its advisers into the audit matters, which concluded with no adverse findings and the company published its 2022 and 2023 financial statements (Note 3).
However, when the SFC made its own inquiry into the payments relating to the Software Development and the UK Acquisition, it uncovered material discrepancies between the bank statements provided by Dashan and those it obtained independently. In particular, the bank statements provided to the SFC by Dashan omitted specific circular fund flows that returned to Dashan.
The SFC also discovered material overstatements of bank balances in Dashan’s financial statements, totalling RMB36.4 million as of 30 June 2023 and RMB76.3 million as of 31 December 2023. These figures represented 19% and 55% of Dashan’s net asset value as stated in its published financial results in 2023 (Note 4).
This led the SFC to suspect that (i) the Software Development and the UK Acquisition were neither genuine nor conducted at arm’s length; (ii) Dashan had submitted fabricated bank statements to the SFC to conceal questionable fund flows related to these transactions; and (iii) Dashan’s published accounts significantly overstated its corporate bank balances. These issues raised serious concerns about the integrity of Dashan’s management, in particular the company’s executive director, Mr Zhang Hongjun, the reliability of its internal controls and accounting systems, and its ability to keep the market properly informed (Note 5).
The SFC further suspected that the resumption of trading in Dashan’s shares on 2 September 2024 was based on false or misleading information provided by Dashan, and the mistaken belief that all the conditions in Stock Exchange’s resumption guidance had been satisfied.
To date, Dashan has failed to provide a satisfactory explanation to address the SFC’s concerns, even though these issues directly pertain to the affairs of Dashan and/or its current director. Therefore, the SFC issued a notice to the Stock Exchange directing it to suspend dealings in Dashan’s shares.
Notes:
- Dashan has been listed on the Main Board of the Stock Exchange since 15 July 2020. At Dashan’s request, trading in its shares has been suspended since 28 November 2025 pending the release of inside information.
- Under section 8(1) of the SMLR, the SFC has the power to direct the Stock Exchange to suspend dealings in shares of a listed company where it appears to the SFC that:
a. any materially false, incomplete or misleading information has been included in any document issued in connection with its listing of securities or in any announcement, statement, circular or other document made or issued by it or on its behalf;
b. it is necessary or expedient in the interest of maintaining an orderly and fair market in securities traded on the Stock Exchange;
c. it is in the interest of the investing public or in the public interest, or it is appropriate for the protection of investors generally or for the protection of investors in the shares of the listed company; or
d. there has been a failure to comply with any condition imposed by the SFC when permitting resumption of trading under section 9(3)(c) of the SMLR.
- Deloitte Touche Tohmatsu was the then auditor of Dashan. It resigned as auditor with effect from 22 May 2023 and was succeeded by Zhonghui Anda CPA Limited with effect from 25 May 2023. Mazars Risk Advisory Services Limited was appointed to conduct the investigation.
- Dashan’s published financial results for the six months ended 30 June 2023 and the financial year ended 31 December 2023.
- At the material times, Mr Zhang Hongjun served as Chairman, Chief Executive Officer, and Executive Director of Dashan.
