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
CENSURES:
(1) Optima Automobile Group Holdings Limited (Stock Code: 8418);
(2) Mr Ang Lay Keong, executive director of the Company;
AND CRITICISES:
(3) Ms Lim Li Ling, executive director of the Company; and
(4) Ms Tan Peck Luan, former executive director of the Company.
AND FURTHER DIRECTS:
Each of the directors to attend 17 hours of training.
The Company’s listing prospectus was misleading.
In the two months leading up to the Company’s listing, there was a significant deterioration in the financial performance of the Company. The listing prospectus only set out the Company’s financial performance up until 31 July 2019. The prospectus contained the directors’ confirmation that there had been no material adverse change to the Company’s financial position from 31 March 2019 up to the date of the prospectus on 27 September 2019. There was no disclosure of the deterioration.
In addition, the Company’s actual listing expenses increased by 80% from those forecasted in the prospectus. The increase was primarily attributable to an underwriter’s bonus and a listing consultant’s fee. Between them, these undisclosed expenses amounted to nearly 19% of the total listing proceeds. It is not clear on what basis the Company decided that these payments were reasonable and should be made.
The directors in this case had primary responsibility for the listing. They did not take steps to monitor the Company’s financial performance, or obtain updated financial information, for the purposes of the prospectus disclosures. They did not procure the Company to prepare monthly management accounts for August and September 2019. Despite the significant amounts involved in the underwriter’s bonus and consultant’s fees, Mr Ang had agreed to pay the proposed amounts even though there was no calculable basis for the amounts requested.
The Exchange notes that the Company and the directors have contributed to an expedited resolution of the matter by agreeing to settle the disciplinary proceedings.
Key messages:
The listing prospectus must contain accurate and complete disclosure, to enable investors to make an informed assessment of the issuer.
The directors of listing applicants should ensure that there is a reasonable basis for making a statement of “no material adverse change” in the prospectus. They must be aware of and consider how the position of the company has evolved since the end of the period reported in the accountants’ reports.
Directors have a duty to safeguard the assets of issuers, which include proceeds of the initial public offering, and ensure the proper use of the issuers’ assets. There must be a sound basis for payments made.
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