CENSURE -- in respect of Mr. Chu Tu Ming ("Mr. Chu") Former Deputy Chairman and Executive Director (resigned from 1 October 1999) of KTP Holdings Limited (the "Company")

Regulatory

06 Sep 2001

CENSURE

in respect of
Mr. Chu Tu Ming ("Mr. Chu")
Former Deputy Chairman and Executive Director
(resigned from 1 October 1999)
of
KTP Holdings Limited (the "Company")

The Stock Exchange of Hong Kong Ltd (the "Exchange") hereby publicly censures Mr. Chu for breaches of the Director's Undertaking and the Exchange Listing Rules.

At a disciplinary hearing held on 12 June 2001, the Listing Committee of the Exchange (the "Listing Committee") conducted a hearing into the conduct of, among others, the Company and Mr. Chu (former executive director of the Company), in the making of certain unauthorised advances by a wholly owned subsidiary of the Company to Mr. Chu (the "Advances").

The Advances were made at Mr. Chus request and for his personal use during the period from 1 April 1998 to 17 October 1998. The Advances were made for a maximum sum of NT$49.5 million (approximately HK$11.7 million) and totalled NT$81.5 million (approximately HK$19.4 million). Mr. Chu subsequently repaid the Advances and also later paid interest at the rate of 1% above the then prime lending rate.

Rule 14.26(6)(a) of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the "Exchange Listing Rules") requires that connected transactions are subject to prior independent shareholders approval in a general meeting. Rule 14.29 of the Exchange Listing Rules further requires a listed issuer to notify the Exchange as soon as possible after the terms of connected transactions have been agreed. In the event, neither Rule 14.26(6)(a) nor Rule 14.29 of the Exchange Listing Rules was complied with.

The Company has previously made an announcement dated 11 October 1999 concerning the Advances, among other things. It was acknowledged that the Advances, being a grant of financial assistance by the Company to a connected person, Mr. Chu, constituted a connected transaction for the purposes of the Exchange Listing Rules.

Mr. Chu has also acknowledged breaching the Declaration and Undertaking with regard to Directors given by him to the Exchange in Form B as set out in Appendix 5B of the Exchange Listing Rules (the "Directors Undertaking") and Rules 3.08(a), (b), (d), (e) and (f) of the Exchange Listing Rules.

The Listing Committee concluded, among other things:

there were breaches of Rules 14.26(6)(a) and 14.29 of the Exchange Listing Rules;
Mr. Chu breached the Directors Undertaking, in which he undertook to comply to the best of his ability with the Exchange Listing Rules from time to time in force, and to use his best endeavours to procure that the Company of which he was a director would so comply; and
Mr. Chu breached Rules 3.08(a), (b), (d), (e) and (f) of the Exchange Listing Rules in failing to fulfil his fiduciary duties to the Company, and in particular, to act honestly and in good faith in the interests of the Company as a whole, to act for proper purposes, to avoid actual and potential conflicts of interest and duty, to disclose fully and fairly his interests in contracts with the Company and to apply such degree of skill, care and diligence as may reasonably be expected of a person of his knowledge and experience and holding his office within the Company.

The Listing Committee is highly critical of the conduct of Mr. Chu in causing the said breaches of Rules 14.26(6)(a) and 14.29 of the Exchange Listing Rules.

Accordingly, the Exchange hereby publicly censures Mr. Chu for his breach of the Directors Undertaking in connection with the said breaches of Rules 14.26(6)(a) and 14.29 of the Exchange Listing Rules and his breach of Rules 3.08(a), (b), (d), (e) and (f) of the Exchange Listing Rules.

For the avoidance of doubt the Exchange confirms that this public censure applies only to Mr. Chu and not to the Company, or any past or present member of the Board of Directors of the Company.

Updated 06 Sep 2001