58 Group's liquidation of its entire portfolio of Wanwu Cloud shares "runs aground" on Hong Kong Stock Exchange rules? Yao Jinbo claims it was an "unintentional mistake" by the investment team.

An investment that lasted nine years has run into a compliance crisis when it finally exits.

In its interim report released on September 10, 58.com disclosed that Dream Landing, a 58-affiliated holding company ultimately controlled by Yao Jinbo, founder, chairman, and CEO of 58.com, sold 6.74 million H shares of 58.com between June 10 and 29, reducing Yao Jinbo's perceived ownership of H shares from approximately 1.01% to 0.44%. Between July 20 and 31, the company sold the remaining 5.108934 million shares. The two rounds of sales totaled 11.848934 million shares, reducing his holdings to zero.

Prior to both rounds of sales, Yao Jinbo failed to provide written notification in accordance with the Directors' Transaction Rules; the July sale also occurred within the interim results lock-up period.

This is not a reduction in holdings by ordinary shareholders.

Yao Jinbo remains a non-executive director of 58.com and is considered to have an interest in the shares held by Dream Landing due to his ultimate control of 58.com. The Hong Kong Stock Exchange's "Code of Conduct for Directors" requires directors to notify the chairman or a designated director in writing before a transaction and obtain confirmation with a specified date; trading is prohibited during a designated period prior to the announcement of interim results.

On August 13, Wanwu Cloud announced its interim results. The lock-up period started on July 14. Therefore, the June transaction involved unannounced transactions, and the July transaction involved both unannounced transactions and transactions during the lock-up period.

The origin of these stocks can be traced back to when Vanke Cloud was still called Vanke Property.

In 2017, 58.com acquired a 5% stake in Vanke Property for RMB 300 million or the equivalent in US dollars, becoming a strategic investor. The cooperation described at the time involved connecting 58.com's online services, such as real estate, housekeeping, and secondhand transactions, with the communities covered by Vanke Property. At the time, Zhu Baoquan, head of Vanke Property, stated that 58.com could provide an entry point for internet-based lifestyle services; Yao Jinbo also discussed community scenarios such as housing transactions and door-to-door services.

However, the withdrawal of 58 Group did not begin this year.

According to the prospectus of Wanwu Cloud, Dream Landing agreed to transfer 19.958 million shares before and after its listing in 2022, for a consideration equivalent to RMB1.9912 billion in US dollars. The transaction was completed at the beginning of the following year.

In April 2024, Yao Jinbo's equity disclosure revealed that his shareholding had decreased from 30.042 million shares to 11.848934 million shares after a sale. The shares sold this summer were all the shares he retained afterward.

The final two rounds of trading took place from June 10 to 29 and July 20 to 31, respectively, with 6.74 million shares and 5.108934 million shares sold. Previous exits were gradually completed through pre-IPO equity transfers and post-IPO share reductions; however, this final sell-off directly conflicted with the rules governing Yao Jinbo's position as a director.

Yao Jinbo told Wanwu Cloud that the sale was an "unintentional mistake" by 58.com's external investment management team. He said he did not have inside information about the company during the transaction and that he has since arranged for his team to receive rule training and strengthen internal reporting and approval processes.

Wanwu Cloud also stated that it would strengthen board training. These responses provided Yao Fang's explanation of the transaction execution process, but did not change the fact that both rounds of transactions lacked prior written notification.

From its strategic investment in 2017 to its complete divestment in 2026, 58 Group has exited its capital investment; however, Yao Jinbo's position as a director has not ended with the loss of his shareholding. The key to this incident lies here: while the team responsible for handling the investment can execute the transaction independently, when a listed company director is considered to have an interest in the shares, the investment process must still adhere to the compliance procedures for director transactions.

The interim report disclosed remedial arrangements, but did not explain how this step had previously failed.

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