BUSINESS

Chinese-based construction firm reaches settlement with securities regulator

06/05/2013 02:49 EDT | Updated 08/05/2013 05:12 EDT
TORONTO - The Ontario Securities Commission has approved a settlement with Boyuan Construction Group Inc. (TSX:BOY) after the regulator took issue with one of the company's loan transactions.

The construction company, which is based in China but listed on the Toronto Stock Exchange, says it has paid a $200,000 penalty as well as $100,000 towards the cost of the investigation.

The OSC had alleged that Boyuan's chief executive entered into a related party transaction and a loan agreement in November 2010, without following proper internal procedures or consulting the chief financial officer, senior executives or the board of directors.

The securities regulator alleges that the company then misled investigators and auditors about the transaction, giving them a fake document and inaccurate responses.

Boyuan says the settlement "fully resolves all issues" and that the loan transaction was for a legitimate business interest, was fully repaid and did not personally benefit any of the company's officers or directors, or their relatives.

The company is required to hire an internal consultant to review its control and reporting procedures and policies and make recommendations on how they can be improved. Boyuan then has nine months to implement the recommendations.

"Today's decision recognizes the extensive efforts made by Boyuan's senior management and board of directors to be forthcoming and transparent in addressing staff's concerns on related party transactions and internal control issues," said company president and chief executive Cai Liang Shou.

"Boyuan is committed to improving its internal control policies and procedures and will endeavour to reach a higher standard as a reporting issuer in Canada."