Hong Kong’s stock exchange censured China Carbon Neutral Development Group and seven directors on Nov. 3 after finding that the company overstated its carbon-credit assets by HK$58.7 million (US$7.5 million), making its financial losses appear substantially smaller than they were.
The Hong Kong-listed company reported a loss of HK$11.3 million (US$1.4 million) for the 12 months ended Dec. 31, 2023. Its actual loss was HK$70 million (US$8.9 million)—more than six times the reported amount, according to the exchange.
The exchange also found that the company failed to disclose two significant transactions on time. It censured Chief Executive Di Ling and six other current or former directors for failing to exercise sufficient care in reviewing the company’s financial statements.
The company and all seven directors accepted the sanctions without contesting the violations.
Carbon Credits Counted Before Verification
The inaccurate figures appeared in the company’s unaudited second interim results and report, published in February and March 2024.
China Carbon Neutral reported holding HK$69.4 million (US$8.8 million) in carbon-credit assets at the end of 2023, an increase of 680 percent from a year earlier. The corrected figure was HK$10.7 million (US$1.4 million), the exchange found.
Carbon credits represent quantities of greenhouse gas emissions reduced or removed. Companies can buy and sell these credits, and their value can affect financial results.
Under China Carbon Neutral’s own accounting policy, carbon credits could be recorded as assets only after verification by an internationally recognized organization, such as Verra, which operates a major voluntary carbon-credit registry.
However, the company counted unverified credits that it expected to be approved.
Its carbon-asset department also supplied incorrect data that overstated the expected number of credits, without adequately accounting for problems affecting the underlying projects.
The errors inflated the company’s reported gains from carbon-credit assets to HK$60.5 million (US$7.7 million), compared with the actual HK$1.8 million (US$229,000).
The HK$58.7 million (US$7.5 million) overstatement amounted to 48 percent of the company’s reported equity at the time.
The errors were discovered during an audit, and the company corrected the figures in its later annual report.
According to the exchange, the extraordinary 680 percent increase should have prompted directors to investigate.
Transactions Disclosed Late
The exchange also found that China Carbon Neutral failed to disclose two transactions promptly.
In October 2023, the company made a 33.8 million yuan (US$5.1 million) advance payment to a supplier for planning services related to proposed zero-carbon industrial parks. The payment exceeded 8 percent of the company’s assets at the time, triggering disclosure requirements.
The company did not disclose the payment until February 2026, after being prompted by the exchange.
Separately, the company failed to promptly disclose the final HK$30 million (US$3.8 million) price of its acquisition of a 60 percent stake in a mainland Chinese company, agreed upon in March 2024.
Di and Deputy Chairman Zhong Guoxing, who approved the transactions, said they had either mistakenly assessed or overlooked the relevant disclosure requirements.
The exchange ordered Di and Zhong to complete 23 hours of regulatory training and the other five directors to complete 17 hours.
Broader Financial Reporting Failures
The case is among a series of Hong Kong stock exchange enforcement actions involving inaccurate financial reporting, inadequate director oversight, and failures to disclose significant transactions.
The exchange concluded 27 disciplinary cases in 2025, compared with 25 in 2024.
Its 2025 Listing Committee Report said public sanctions were imposed on 13 listed companies and 91 individuals during the year.
In another case, the exchange censured CHK Oil, a Hong Kong-listed oil and gas company with operations in the United States, in March 2026 for continuing to record U.S. oil and gas leases as assets after the leases had been terminated.
The exchange found that CHK Oil’s assets were overstated by approximately 65.5 percent in 2022 and 58.1 percent in 2023.
Its former chief executive knew that the leases had been terminated in November 2022 but failed to inform the company’s board or auditors. The board did not learn of the loss of those assets until August 2024, according to the exchange.
