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Enforcement Statistics

(1) Investigations Statistics

This table shows the number of parties and rule breaches involved in the investigations carried out by Listing Enforcement of the Stock Exchange during the course of the first six months of the year as compared to the previous year.

Six months ended
30/6/2018(1)
Six months ended
30/6/2017(1)
MB GEM Total MB GEM Total
Investigations 57 20 77 54 15 69
Cases involving:
  Company 53 17 70 46 14 60
  Current directors(2) 11 10 21 14 4 18
  Former directors(2) 22 12 34 18 8 26
  3 Listing Rule breaches (or less) 35 12 47 31 9 40
  More than 3 Listing Rule breaches 22 8 30 23 6 29
Investigations involving, and referrals to, other regulators(3) 29 6 35 27 4 31
(1) Figures cover investigations concluded during the period and investigations which remained active as at the end of the period.
(2) Figures may include directors residing overseas.
(3) Other regulators include regulators such as the Securities and Futures Commission (SFC), Independent Commission against Corruption, Financial Reporting Council and the Commercial Crime Bureau.  Referrals do not include those made to the SFC which do not arise out of an investigation for potential breach of the Listing Rules or those matters specifically under the remit of the SFC’s jurisdiction e.g. referrals made under the Inside Information Provisions in Part XIVA of the Securities and Futures Ordinance.

(2) Issues under Investigation

Since 2014 the Stock Exchange has been adopting a themed approach to enforcement activity. Following a review, the Listing Committee has modified the focus for investigation and enforcement action from five to the following seven themes. Notwithstanding this themed approach to investigation, the Exchange will continue to pursue any other breaches of the Listing Rules that may demonstrate sufficiently egregious conduct beyond the scope of the themes.

ISSUES Six months ended
30/6/2018(1)
Six months ended
30/6/2017(1)
MB GEM Total MB GEM Total
CORE THEMES(2)  
(1) Directors’ duties 17 5 22 7 3 10
(2) Failure to cooperate with an Exchange investigation 4 1 5 6 1 7
(3) Inaccurate, incomplete and/or misleading disclosure in corporate communication 3 1 4 1 1 2
(4) Failure to comply with procedural requirements in respect of notifiable/connected transactions 5 0 5 5 1 6
(5) Repeated breaches of the Listing Rules 0 1 1 0 0 0
(6) Delayed trading resumption 0 0 0 0 0 0
(7) Financial reporting - delays, or internal controls and corporate governance issues 1 0 1 1 0 1
MULTIPLE THEMES(3) 23 10 33 26 8 34
OTHERS:
Other Listing Rules not falling into any of the above categories 4 2 6 8 1 9
(1) Figures cover investigations concluded during the period and investigations which remained active as at the end of the period.
(2) Core themes represent those that are the main focus of an investigation (whether or not it involves other issues).  An investigation covering more than one core theme will be disclosed under "Multiple Themes".
(3) Number of investigations under “Multiple Themes” involving Theme (1) for the six months ended 30 June 2018: (2018: 25; 2017: 28); Theme (2): (2018: 2; 2017: 2); Theme (3): (2018: 14; 2017: 18); Theme 4: (2018: 18; 2017: 15); Theme 5: (2018: 7; 2017: 5); Theme 6: (2018: 2; 2017: 1); Theme 7: (2018: 13; 2017: 11).

(3) Outcome of Enforcement Actions by Listing Committee and Enforcement

Six months ended
30/6/2018
Six months ended
30/6/2017
MB GEM Total MB GEM Total
Sanctions imposed(1)  
Public censures 7 4 11 3 0 3
Public statements involving criticism 0 0 0 0 0 0
Other public statements(2) 0 1 1 0 0 0
Private reprimands 0 0 0 0 0 0
Directions involving(3):  
Internal Control Review 0 0 0 0 0 0
Retention of Compliance Advisor 0 3 3 1 0 1
Training of Directors 2 3 5 2 0 2
Warning/ caution letters issued by Enforcement only 5 1 6 4 0 4
Average time for completion of an investigation (from commencement of investigation to the decision as to the regulatory action to be taken) was 8.7 months for cases investigation of which was completed in the first six months of 2018.
(1) These figures represent the primary regulatory sanction imposed in a disciplinary action and save for (2) below, do not include other sanctions that may be imposed in the same action.
(2) Include Rule 2A.09(7) statement (GEM: GEM Listing Rule 3.10(7)) where, in the case of wilful or persistent failure by a director to discharge his responsibilities under the Listing Rules, the Exchange states its opinion that the retention of office by that director is prejudicial to the interests of investors; and also where the Listing Committee expresses its views that it would be minded to make such a statement had the resigned director stayed in office.  These figures are in addition to and do not form part of the total number of primary regulatory sanctions imposed.
(3) These figures represent the total number of directions given in addition to the primary regulatory sanction imposed in a disciplinary action.

(4) Number of Directors Subject to Disciplinary Sanctions

Six months ended
30/6/2018
Six months ended
30/6/2017
MB GEM Total MB GEM Total
  Executive directors 13 23 36 9 0 9
  Non-executive directors 1 4 5 2 0 2
  Independent non-executive directors 6 13 19 0 0 0
Total 20 40 60 11 0 11

Updated 20 Jul 2018

Updated 20 Jul 2018

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