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A $391 Million Fine Has China’s Board Members Quitting En Masse

  • Board directors were found liable for Kangmei’s fraud
  • More than 20 independent directors resigned since ruling

China’s independent directors are quitting once coveted seats on the boards of listed companies, spooked by fines levied on five directors of Kangmei Pharmaceutical Co. that totaled hundreds of millions of dollars.

Independent directors of at least 20 companies listed on the Shanghai and Shenzhen stock exchanges have resigned after a Guangzhou court ruled on Nov. 12 that some Kangmei executives and their external accountants were responsible for fabricating its financial statements. They were required to jointly compensate investors for a combined 2.5 billion yuan ($391 million) of losses.