Troubled railway parts maker Midas Holdings has been hit with a notice of compliance by regulators demanding the immediate resignation of two of its top executives.
The Singapore Exchange (SGX) said in the notice that Midas executive chairman Chen Wei Ping cannot be appointed as a director or executive officer in any listed company for the next three years.
It has also barred Mr Ma Ming Zhang, the legal representative of Midas unit Luoyang Midas Aluminium Industries, from being appointed an executive officer in any listed company for the next three years.
These latest blows come after the company's audit committee lodged a police report with Singapore's Commercial Affairs Department last week over a possible breach of securities laws and other offences linked to irregularities in the group's operations in China. These involved unauthorised loans taken out by the company's subsidiaries as well as the provision of unauthorised corporate guarantees.
Last month, Midas Holdings' legal counsel in China obtained documents from the Jilin High People's Court that showed one such instance.
The documents showed that the company's unit, Jilin Midas Aluminium Industries, took out loans amounting to 379 million yuan (S$79 million).
The lender for these loans did not exist in the group's accounts, even though the company and some of its wholly owned Chinese subsidiaries had provided corporate guarantees for the loans.
The guarantees were executed by Mr Sun Qi Xiang, the legal representative of Jilin Midas Light Alloy, Mr Ma, Mr Chen and Mr Yang Xiao Guang, the legal representative of Dalian Huicheng Aluminium, another unit of Midas Holdings. They did not seek approval from the Midas board for providing these guarantees.
Jilin Midas Aluminium Industries and the guarantors were subsequently sued in China by the lender, but this was also not reported to the Midas board.
Midas has also separately said that despite instructions given to its subsidiaries to remit funds to its Singapore office for the redemption of its US$30 million 7 per cent notes due last year (now extended to this year), it has yet to receive any funds.
The subsidiaries are Jilin Midas Aluminium Industries and Jilin Midas Light Alloy.
In view of these developments, there are "immediate and serious concerns" about the suitability of Mr Chen and Mr Ma to continue in their roles, said the SGX. It also noted that other executives named in Midas' disclosures about events in China - including Mr Yang, Mr Sun and former chief executive Patrick Chew - have since resigned or been replaced.
Trading in the company's stock has been suspended since early February.