Best World's finalised scope of expanded independent review gets SGX RegCo's green light

BEST World International said on Monday night that the scope of its expanded independent review has been finalised and approved by the Singapore Exchange (SGX RegCo), with the independent review in progress.

The move comes after the mainboard-listed skincare products firm was served a notice of compliance by the SGX RegCo on May 13 to expand the scope of independent reviewer PwC's review.

This was to determine the veracity of Best World's sales in China under the export model from 2015 to 2018, and whether these were conducted on normal commercial terms.

In its latest regulatory update, the firm said the expanded scope of the independent review will look to identify any potential breaches of listing rules, regulations or laws; and identify any lapses in Best World's internal control procedures and corporate governance practices regarding the work, along with making apt recommendations on any internal control weakness.

It will look to ascertain the facts and circumstances surrounding the establishment, appointment and business relationship with primary import agent Changsha Best.

It will also verify the sales under the export model to Changsha Best and other import agents used by Best World in China for fiscal 2015 to fiscal 2018. This is to determine if the sales were conducted on normal commercial terms and at arm's length basis.

On top of verifying the sales, it will validate the cash received from the sales to distributors or customers by Changsha Best.

When the review is completed, independent reviewer PwC will report its findings directly to the SGX RegCo, and Best World will disclose the key findings in an executive summary on the SGXNet, it added.

The SGX RegCo has been investigating Best World's business dealings after the skincare seller confirmed on May 13 that its biggest customer, Changsha Best, was owned by the brother-in-law of its chief executive Dora Hoan, and also revealed more links between the two firms.

Changsha Best was also Best World's primary import agent in China until the middle of last year.

The disclosure followed a short-seller report which questioned the accounting behind its profits and sales practices in China, then an anonymous report which linked Changsha Best to its chief executive's brother-in-law.

In the May 13 compliance notice, SGX RegCo ordered Best World to get Changsha Best and other import agents to hand over copies of their financial information, accounting and corporate records to SGX RegCo. Best World was also told to put SGX RegCo in contact with the import agents' customers, warehouses and delivery service providers.

On June 24, SGX RegCo approved Best World's application for a four-month extension to hold its annual general meeting (AGM), after an earlier extension to hold the AGM by two months to June 30. The firm has until Oct 31 to convene its AGM.

Trading in Best World shares will remain suspended until SGX RegCo completes its investigations.

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