Public censure announcement
Benefun International Holdings Limited (the "company"),
and Mr Tan Sim Chew, Ms Chen Miao Zhu, Mr Lo King Fat Lawrence and Mr Fu Zi Cong
(collectively the "Executive Directors")
The Stock Exchange of Hong Kong hereby publicly censures the Company and each of the Executive Directors of the Company for breaches of the Listing Agreement, the Exchange Listing Rules, and the Declaration and Undertaking with regard to Directors given by the Executive Directors to the Exchange in the form set out in Appendix 5B of the Exchange Listing Rules.
At the disciplinary hearing held on April 18, 2000, the Listing Committee of the Exchange conducted a hearing into the conduct of the Company and each of Mr. Tan Sim Chew, Ms. Chen Miao Zhu, Mr. Lo King Fat, Lawrence, and Mr. Fu Zi Cong, the Executive Directors of the Company.
The Disciplinary Hearing was conducted in respect of the possible breaches of the Exchange Listing Rules by the Executive Directors in relation to certain allegations from the Listing Division in connection with their conduct relating to a transaction which related to a proposed share placement by the Company by way of subscription agreement under which the subscribers and subscription price had been determined on or before June 10, 1999. The actions of the Executive Directors in authorising the publication of two standard unqualified clarification announcements on June 17, 1999 and June 21, 1999, respectively, both made pursuant to paragraph 39.2 of the Company's Listing Agreement, without making appropriate reference to the Transaction in either of the Paragraph 39 Announcements and denying the Company or its directors were aware of any matter which could explain the fluctuations in the Company's share price and turnover volume, were information misleading to the Exchange, the shareholders of the Company and the investing public.
The Listing Committee was of the view that the obligations imposed by Paragraph 39 of the Listing Agreement were aimed at ensuring the prompt, fair, and even dissemination of information to the market so as to avoid the establishment of a false or misleading market in the securities of an issuer and to maintain an orderly market.
Further, each of the Paragraphs 39 Announcements contained a joint and individual responsibility statement by all the directors of the Company as to the truth and accuracy of the contents of each announcement, and each of which was purportedly made "By Order of the Board". It however transpired that the Paragraph 39 Announcements were made without prior consultation with the independent non-executive directors of the Company.
The Listing Committee denounced that Mr. Lo issued the unqualified Paragraph 39 Announcements for and on behalf of all directors of the Company at the material time without prior consultation with the independent non-executive directors of the Company. In this regard, the Listing Committee is extremely dissatisfied with and highly critical of the conduct of Mr. Lo who acted contrary to the interests of the Company and its shareholders and in blatant breach of his role as an Executive Director of the Company.
The Listing Committee was of the further view that the obligations imposed by Paragraph 2 of the Listing Agreement which required, among other things, the disclosure of any information which was not public knowledge relating to the Company and its shareholders to enable them and the investing public to appraise the position of the Company, or might reasonably be expected to affect market activity in and the price of its securities, then such information should be disclosed as soon as reasonably practicable. The Listing Committee considers that the Executive Directors had also breached these provisions of the Listing Agreement in failing to make an announcement disclosing the Transaction which had been negotiated and arranged on or before June 10, 1999.
The Company and Executive Directors admitted breaching the disclosure requirements of Paragraphs 2 and 39 of the Listing Agreement, the Exchange Listing Rules and relevant Undertakings.
The Listing Committee concluded that the Paragraph 39 Announcements made by the Company on June 17, 1999 and June 21, 1999 were in breach of Paragraph 39 of the Listing Agreement and the Company and Executive Directors were also in breach of Paragraph 2 of the Listing Agreement, and that the Executive Directors had breached the Exchange Listing Rules in authorising the publication of the Paragraph 39 Announcements that were misleading to the shareholders of the Company and the investing public.
The Listing Committee also found that by virtue of the said breaches of the Listing Agreement by the Company, the Executive Directors had breached their respective Undertaking, whereby they individually undertook to comply to the best of their abilities with the Exchange Listing Rules from time to time in force, and to use their best endeavours to procure that the Company of which they are directors would so comply; and further in failing to fulfil their fiduciary duties and duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law, each of the Executive Directors thereby failed to comply with Rule 3.08 (f) of the Exchange Listing Rules.
Accordingly, the Company and the Executive Directors are hereby publicly censured by the Listing Committee for:-
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the Company's breaches of Paragraphs 2 and 39 of the Listing Agreement;
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the Executive Directors' breaches of Exchange Listing Rule 3.08 (f) and their Undertakings; and
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the Executive Directors', in particular, Mr. Lo's actions in causing to be published by the Company two Paragraph 39 announcements purported to be made "By Order of the Board" and containing a director's responsibility statement which were both made without the Company's independent non-executive directors being consulted.
For the avoidance of doubt the Exchange confirms that it is not in relation to this matter publicly censuring any other directors of the Company, past or present directors of the Company save for those named herein.
Corporate Communications