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) Target Insurance (Holdings) Limited (delisted, previous stock code: 6161);
IMPOSES A PREJUDICE TO INVESTORS’ INTERESTS STATEMENT1 and CENSURE against:
(2) Dr Ng Yu, former chairman and non-executive director;
(3) Ms Liang Qin, executive director of the Company at the time of delisting;
(4) Mr Ling Xujun, non-executive director of the Company at the time of delisting;
(5) Mr Chiam Tat Yiu, independent non-executive director of the Company at the time of delisting;
(6) Mr Yu Cho Tak, independent non-executive director of the Company at the time of delisting; and
(7) Dr He Xiaobin, independent non-executive director of the Company at the time of delisting.
The Exchange took this disciplinary action against:
(i) the Company for publication of inaccurate, incomplete and misleading announcements relating to its business and resumption prospects; and
(ii) the entire board of directors of the Company for failure to discharge their directors’ duties for the accuracy of the announcements.
At the material time, the Company was a long suspended company with its shares having been suspended from trading since 2022. It was required to, among others, demonstrate that it had a sufficient level of operations to warrant its continued listing and resume trading by 4 July 2023. It would otherwise be delisted.
Between 3 March and 5 June 2023 (a few months before the trading resumption deadline), the Company published a series of announcements (Announcements) about its proposed new insurance business in the United Arab Emirates (UAE) and resumption prospects. The Announcements were approved for publication by the Company’s board at the relevant time.
Among others, the Announcements stated that to support the Company’s fulfilment of the sufficient operations requirements, its substantial shareholder, Dr Ng, had on 28 February 2023 offered to gift the Company what was described as a newly formed UAE licensed insurer called Himalayas Insurance (Himalayas).
The Announcements projected a message that with the injection of Himalayas as a UAE licensed insurer licensed to engage in a range of insurance activities, the Company would develop a substantive international insurance business in the near future. The Company was said to intend to raise substantial new funds from investors in connection with the proposed UAE insurance business, including a contemplated $4 billion bond issuance.
However, these Announcements were materially inaccurate and incomplete and gave a misleading impression about the Company’s state of readiness to develop the insurance business in the UAE. The true position was that Himalayas had only obtained a business licence and a business activity certificate from the Sharjah Publishing City Free Zone (SPC Free Zone)2, not the wider UAE. The business licence was valid only for one year expiring in July 2023, four months from the first of the Announcements made.
The directors by no later than July 2023 became aware of the expiry of the business licence in that month. However, they did not procure the Company to announce the true position until October 2023. This had further deprived investors of timely and accurate information relating to the Company’s business and resumption prospects.
The Company was found to have performed only preliminary due diligence on Himalayas at the material time, without seeking appropriate advice on the regulatory status of Himalayas and the scope of its licence. This was despite the insurance business being a regulated industry. The due diligence that had been conducted into Himalayas was inadequate to ascertain its licensing position, the scope of its permitted operations, the applicable regulations and the procedures for renewing the business licence.
The directors demonstrated a reckless disregard for the accuracy of the Announcements.
Key messages:
Directors of a listed issuer, executive or non-executive, must take sufficient steps to ensure that the information which the issuer discloses to the public and the Exchange is accurate and complete in all material respects and not misleading. This is imperative for the operation of a fair, orderly and informed market for the trading of securities. The Exchange is determined to take disciplinary action against those who fail to comply with this requirement.
In this case, the Exchange highlights the seriousness of the directors’ reckless disregard for their duties as they procured the issuer to make repeated disclosures which portrayed a materially inaccurate and misleading impression about the issuer’s prospect of achieving trading resumption, when the issuer was subject to an imminent resumption deadline by which it had to demonstrate to have sufficient operations to maintain its listing status.
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Notes:
- The Prejudice to Investors’ Interests Statement is a statement that, in the Exchange’s opinion, the occupying of the position of director or senior management of the Company or any of its subsidiaries by each of Dr Ng, Ms Liang, Mr Ling, Mr Chiam, Mr Yu and Dr He may cause prejudice to the interests of investors.
- The Sharjah Publishing City Free Zone is a non-financial free zone with a focus on the global print and publishing industry.
Ends