Exchange’s Disciplinary Action against IntelliCentrics Global Holdings Ltd (Stock Code: 6819) and Two Executive Directors
Regulatory
29 Jun 2021
香港聯合交易所有限公司
(香港交易及結算所有限公司全資附屬公司)
THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)
The Listing Committee of The Stock Exchange of Hong Kong Limited (The Exchange)
CENSURES:
(1) IntelliCentrics Global Holdings Ltd (Stock Code: 6819) (Company);
(2) Mr Lin Tzung-Liang, executive director (ED) and Chairman of the Company (Mr Lin); and
(3) Mr Michael James Sheehan, ED and Chief Executive Officer of the Company (together with Mr Lin, Relevant Directors).
This case involves the use of IPO proceeds by the Company to acquire promissory notes on its first day of listing. The Company, the Relevant Directors and the Listing Division reached a settlement in respect of the Listing Rule breaches of the Company and the Relevant Directors as described below.
The Exchange found, as admitted by the Company in its announcement of 19 May 2020, that its acquisition of the promissory notes constituted major transactions and advances to entities, and that the Company failed to comply with the relevant provisions of the Listing Rules in a timely manner. The Company also failed to consult its compliance adviser prior to the purchase of the promissory notes.
The Relevant Directors were responsible for the decision to invest in the promissory notes. The Exchange found that they had failed to (a) correctly consider the Listing Rule implications of the acquisition or to obtain independent advice, and therefore did not procure the Company to consult its compliance adviser on the same, and (b) conduct sufficient due diligence on the issuers of the promissory notes. In the circumstances, the Relevant Directors breached Rule 3.08(f) and their Directors’ Undertakings.
Key Messages:
In this case, the Company decided to use almost the full amount of its IPO proceeds to acquire the promissory notes upon listing, with no disclosure being made to the market. This resulted in serious breaches of the Listing Rules.
Issuers are reminded that acquisitions of promissory notes, as well as other wealth management products, are generally regarded as “transactions” for the purposes of the Listing Rules, even if they are issued by licensed banks or authorised financial institutions. Issuers must consider the Listing Rule implications and comply with the procedural requirements where applicable.
Directors are expected to be familiar with the provisions of the Listing Rules, as they are ultimately responsible for Listing Rule compliance. Even if advice has been obtained from a professional party, directors must exercise independent judgement, have a questioning mind, and seek further clarification and/or advice if required. Directors are also expected to ensure that independent and sufficient investigation and due diligence is carried out prior to the acquisition of assets or investments.
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For the avoidance of doubt, the Exchange confirms that the sanctions in the Statement of Disciplinary Action apply only to the Company and the Relevant Directors, and not to any other past or present members of the board of directors of the Company.
Ends