Hui Ka Yan, the billionaire who heads the distressed China Evergrande Group, has been taken under police control, according to people familiar with the situation.

It’s not clear why Hui is under so-called residential surveillance, a type of police action that falls short of formal detention or arrest, and doesn’t necessarily mean Hui will be charged with a crime.

However, according to China’s criminal procedure law, he cannot leave the place of stay, meet or communicate with others without authorization.

Passports and identity cards must be handed over to the police, but this process, according to the law, should not exceed six months.

The move is the latest sign that the developer’s story has entered a new phase after authorities detained several employees of the asset management unit earlier this month, as well as two former executives of the company who were also reportedly detained.

Against this backdrop, shares of Chinese real estate companies have fallen to their lowest level since October 2011.

Investors are also affected by concerns about liquidity and low demand for housing, especially with a week-long trade break on the mainland ahead.

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