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
IMPOSES:
A DIRECTOR UNSUITABILITY STATEMENT against:
(1) Ms Shen Jie, former chairman and executive director; and
A PREJUDICE TO INVESTORS’ INTERESTS STATEMENT against:
(2) Mr Ren Hui Yong, former chairman and executive director.
The statements made in respect of Ms Shen and Mr Ren above are made in addition to a public censure against each of them. The Director Unsuitability Statement is a statement that, in the Exchange’s opinion, Ms Shen is unsuitable to occupy a position as director or within senior management of the Company or any of its subsidiaries. The Prejudice to Investors’ Interests Statement is a statement that, in the Exchange’s opinion, had Mr Ren remained on the board of directors of the Company, his retention of office would have been prejudicial to the interests of investors.
This case concerned a loss of over US$1 million for the Company as a result of a series of sale and purchase transactions pursuant to a joint venture arrangement. All the monies paid by the Company in respect of the joint venture were misappropriated.
The joint venture was proposed to Ms Shen by a new acquaintance of hers. It involved a new business for the Company, and was with previously unknown counterparties. Ms Shen undertook no or very limited due diligence, and did not conduct any commercial or risk assessment in respect of the joint venture business. Nevertheless, and without informing or consulting the other directors, Ms Shen agreed to the joint venture.
Ms Shen and Mr Ren breached their undertakings to co-operate in the Exchange’s investigation.
Key messages:
Directors must act with appropriate diligence and safeguard the assets of issuers. Particular care must be taken when entering into a new business.
As a minimum, there must be sufficient due diligence, and the board should conduct a commercial and risk assessment. The board must also be kept appropriately informed and involved in the decision-making process.
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