THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)
CRITICISM
In respect of
Excel Technology International Holdings Limited
("the Company")
and Mr. IP Kim Kuen (executive director) ("Mr. Ip")
The Stock Exchange of Hong Kong Limited (the Exchange) hereby criticises the Company and Mr. Ip in relation to share repurchase orders made on behalf of the Company :
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after 3:30 pm on 6, 7, 11 and 12 September 2001; and
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at prices higher than the higher of the then current independent bid and last independent sale price on 11 days in the period 6 September to 10 October 2001. This conduct constituted breaches of Rule 13.11(6) of the GEM Listing Rules. The Exchange does not allege that the breaches were committed intentionally or knowingly by the Company or Mr. Ip.
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Rule 13.11(6) of the GEM Listing Rules contains technical dealing restrictions which require issuers not to execute share repurchases after 3:30 pm or at prices higher than the higher of the then current independent bid and last independent sale price ("the Dealing Restrictions"). The Exchange notes that the Dealing Restrictions apply to GEM listed issuers but not Main Board listed issuers.
The Company acknowledges that it was subsequently made aware (by written notice from the Exchange) of the fact that it had made share repurchases through a wholly-owned subsidiary on four days in September 2001 after 3:30 pm, and at prices higher than the higher of the then current independent bid and last independent sale price in 41 trades executed on 11 days in the period 6 September to 10 October 2001.
The Exchange acknowledges that the breaches were inadvertent. Mr. Ip, on behalf of the wholly-owned subsidiary of the Company, instructed a licensed dealer to execute the share repurchases in the period 6 September to 10 October 2001. In doing so, Mr. Ip advised the licensed dealer, prior to the trade execution, that the transactions were share repurchases and that they needed to be executed in accordance with the GEM Listing Rules. Mr. Ip, on behalf of the Company, omitted to specifically confirm with the licensed dealer that he understood and would comply with the Dealing Restrictions.
Because the Company and Mr. Ip did not know the licensed dealer executed orders that did not comply with the Dealing Restrictions, the Company inadvertently published incorrect statements on 6, 7, 11, 12, 14, 25, 26 and 27 September 2001 and 4, 5 and 10 October 2001 that the share repurchases executed on those days had complied with the GEM Listing Rules.
The Company and its directors have undertaken to the Exchange that they will adopt the following procedures when implementing share repurchases in the future:
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appointing a compliance officer responsible for ensuring that the share repurchases are made in compliance with the GEM Listing Rules;
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clearly instructing its stockbroker to execute all orders in compliance with the Dealing Restrictions;
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obtaining written confirmation from its stockbroker that he or she understands the Dealing Restrictions and will comply with them in executing the Company's share repurchase instructions; and
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obtaining written confirmation from its stockbroker at the end of each trading day that all share repurchase orders were executed in compliance with the Dealing Restrictions.