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) C-Link Squared Limited;
(2) Mr Ling Sheng Hwang, former executive director; and
(3) Mr Ling Sheng Chung, former executive director.
The Company entered into service agreements on the day of, and very shortly after, listing. Pursuant to these agreements, non-refundable payments of HK$38.5 million were made to the service providers within a week of listing. This substantial sum was equivalent to more than half of the Company’s IPO proceeds from listing, but these transactions and payments were not disclosed at the time.
The payment of the fees to the service providers heavily contributed to a material shortfall in the Company’s net profit and loss, when referenced to the Company’s profit and cash flow forecast memorandum submitted at the time of listing.
The failure to (1) disclose those potential engagements in the Company’s profit memorandum or listing prospectus, (2) fully assist the sponsor to perform its due diligence work, and (3) consult the Compliance Adviser before paying the service fees, resulted in insufficient information being provided to the investing public at the time of listing, and exposed the Company to significant financial risk.
The Company and the directors contributed to an expedited resolution of the matter by accepting their breaches and agreeing to settle. In addition to being censured, the directors have undertaken (1) to resign from all directorships and senior management positions in the Company/ its subsidiaries within 28 days, and (2) not to take up any directorship or senior management positions in any listed issuer in Hong Kong in the future.
The directors had ceased directorship and senior management positions of the Company with effect from 1 May 2023 (as announced in the Company’s announcement dated 1 May 2023). They also resigned as directors from all of the Company’s subsidiaries on 30 April 2023.
Key messages:
This is another case involving an issuer making substantial payments at the time of listing without proper disclosure.
Proper disclosure is important to protect shareholders and the investing public, including from the types of IPO-related misconduct described in the Joint statement published by the Exchange and the SFC in May 2021.
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