This article only represents the author's own views.

The board of trendy restaurant operator Jiumaojiu International Holdings Inc. (9922.HK) thought it smelled something fishy when it recently noticed a suspicious 80.7 million yuan ($11.2 million) loan made in January to a company called Guangzhou Yanshang Investment. It did some sniffing around, and quickly discovered the ultimate borrower was none other than Guan Yihong, the company’s chairman and founder.

While this kind of insider lending isn’t illegal, it should be vetted with the company’s board to avoid any semblance of impropriety. And listing rules also require that shareholders should be informed. Neither happened in this case, and the board said in an announcement late Friday it only discovered the loan when it was preparing the company’s interim results announcement published on Aug. 22.