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 Stock Exchange of Hong Kong Limited
CRITICISES:
(1) Fantasia Holdings Group Co., Limited (Stock Code: 1777);
(2) Colour Life Services Group Co., Limited (Stock Code: 1778);
(3) Mr Pan Jun, executive director of Fantasia, and executive director and former non-executive director of Colour Life;
(4) Mr Tang Xue Bin, former executive director and former non-executive director of Colour Life;
(5) Mr Lam Kam Tong, former executive director and former non-executive director of Fantasia, and former non-executive director of Colour Life; and
(6) Mr Zhou Qin Wei, former executive director of Colour Life.
Colour Life was spun off from Fantasia in 2014. At that time, the two companies entered into a deed and scheme to ensure clear delineation between their respective businesses.
The Exchange found that Fantasia and Colour Life were in breach of the deed and the scheme respectively, which resulted from their failure to put in place adequate and effective internal controls to procure compliance with the deed and the scheme. This led to inaccurate disclosures in Colour Life’s annual reports.
Mr Pan, Mr Tang, Mr Lam and Mr Zhou were members of a management team responsible for ensuring the companies’ compliance with the deed and the scheme. The Exchange found that they breached their directors’ duties in respect of the internal control deficiencies, which caused the companies’ respective breaches.
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The Exchange expects issuers contemplating a spin-off to satisfy a requirement that there should be clear delineation between the businesses retained by the parent and the business of the company to be spun off.
In this case, the companies did not adhere to the arrangement which had been established to safeguard shareholders’ interests and disclosed to the market. Adequate and effective internal controls must be put in place to ensure compliance with any such arrangement.
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Ends