Dongfang Modern Ag said the abrupt resignations in June of its chief executive and almost the entire board came after a rumoured investigation of criminal connections to its plantations in China.
ASX-listed Chinese citrus grower gave no explanation when the resignations occurred last month but attributed them to the rumours in a letter to the Australian Securities Exchange late on Thursday.
The letter added that the rumours were false.
In the letter, Dongfang’s lawyers said the company believed two directors quit after hearing rumours that officials in the southeast China city of Ganzhou interviewed staff and were investigating “criminal connections”.
“These rumours were not true,” said the letter, which was published by the ASX.
“Because the independent directors could not investigate this rumour for themselves by visiting the plantations they tendered their resignation due to the seriousness of the rumours even though the rumours were false.”
Those resignations prompted two more directors to quit and then the CEO, Chiu So, “resigned also because he was seeking another career development”, the letter said.
The company secretary then also quit.
Shares in Dongfang, which listed at $1.06 in 2015, were suspended in June after the resignations left them without a sufficient number of directors.
They last traded at 83 cents giving the firm a market capitalisation just below $350 million.
Dongfang did not respond to an emailed request for comment.
Former CEO So said by phone the rumours were wrong, without elaborating.
“I have already resigned. Please contact the company to ask for more information,” he said.
“I have nothing more to say.”
Dongfang is among dozens of small Chinese firms to list in Australia in recent years, lured by the prospect of a simpler public offering process and less volatility than markets at home.
It was among more than 40 Chinese firms that the ASX wrote to in 2017 asking whether China’s crackdown on capital outflows presents them any difficulties.
Dongfang said it was actively looking for replacement directors.
The company said in March that it had sold more than 280,000 tonnes of fruit, including oranges and tangerines, in 2018, for a net profit of $84.4 and an operating margin better than 45 per cent.