Dapai International, previously known as China Zaino, was delisted from the Singapore Exchange today, joining a long list of S-chips that have bit the dust.

Dapai's demise followed on SGX's delisting notification to the company in July 2017.

Neither Dapai nor any controlling shareholder made an exit offer to shareholders, marking a sad end to a journey which began -- very promisingly -- with the company's IPO in April 2008 with a market capitalisation of S$567 million.

Its IPO raised S$87 million in gross proceeds, attracting investors with its claim as the "No.1 Backpack Company in China" with the largest market share of 35.8% in terms of revenue in 2006 (RMB930 million).

Its IPO prospectus also said it had "over 3,000 concessionary retail outlets in 26 provinces, autonomous regions and municipalities in China."

It was also conferred China Leather Industry Association’s “2006 Top 12 Bag Brands in China”.

Yesterday, Singapore Exchange Regulation (“SGX RegCo”) publicly reprimanded Executive Chairman Chen Xizhong, former CEO Chen Yong -- who is the son of chairman Chen -- and former CFO Lawrence Lam Pong Sui.

zaino chairman 375Dapai chairman Chen Xizhong held 43.8% of the company, according to its FY17 annual report. It referred to the findings in the independent reviews by BDO LLP (“BDO”) and Kordamentha Pte Ltd (“Kordamentha”) into allegations that various transactions by the Dapai Group and certain sales distributors and renovation contractors relating to the Company’s initiative to open 500 retail outlets in China were fictitious and/or misrepresented.

SGX RegCo said:

•  "The Company had made non-factual, false and misleading statements on various transactions by the Dapai Group, the veracity of the proposed opening of the 500 outlets as well as on the payments to its distributors and contractors involved in the opening of the 500 outlets."

200 1lawrence lamFormer CFO Lawrence Lam. "The Company had made non-factual, false and misleading statements in its 2009 and 2010 annual reports that the system of internal controls maintained by the Company’s management throughout the financial years ended 31 December 2009 and 31 December 2010 up to the dates of the respective annual reports, was adequate to meet the needs of the Group in its current business environment. The Board’s confirmations given in the annual reports on the system of internal controls were false and misleading."

•  "The Company had no procedure in place to keep track on how and when the 500 retail outlets were started. There was also no proper centralised documentation in place, the journal entries on payment to distributors and contractors were brief and poor controls were prevalent for the opening of the 500 retail outlets. Although these were highlighted at the Audit Committee meetings on 17 February 2012 and 28 July 2012 by the internal auditor and Mr Terence Ng Kiat Peen (who replaced Mr Lawrence Lam Pong Sui as the Chief Financial Officer since 1 July 2011), no further actions were taken."

SGX RegCo is of the view that Mr Chen Xizhong (Executive Chairman), Mr Chen Yong (former Chief Executive Officer) and Mr Lawrence Lam Pong Sui (former Chief Financial Officer), who were responsible for the payment and reporting of the transactions relating to the opening of the 500 retail outlets, failed to demonstrate the character and integrity expected of directors and management of listed issuers.

SGX-listed companies are advised to consult SGX RegCo before they appoint Mr Chen Xizhong, Mr Chen Yong and Mr Lawrence Lam Pong Sui as a director and/or management (including appointments to the position of legal representative).

SGX RegCo has referred the case to the relevant authorities.

SGX's full statement here.