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:
- Home Control International Limited (Stock Code: 1747);
- Mr Gao Yu, former Chairman and non-executive director of the Company; and
- Mr Chan Kwok King Kingsley, former non-executive director of the Company,
AND FURTHER DIRECTS:
Each of Mr Gao and Mr Chan to attend 20 hours of training.
The Company was found to have entered into a subscription agreement for an investment product around the Company’s listing, which constituted a change in use of its IPO proceeds and discloseable transaction to the Company, but failed to comply with the disclosure requirements under the Listing Rules. Nor did it inform the IPO sponsor or consult its compliance adviser in respect of the subscription.
Two of the then directors, Mr Gao and Mr Chan, were found to have failed to exercise reasonable skill, care and diligence to safeguard the Company’s interests and assets in relation to the subscription agreement.
On 13 November 2019, one day before the Company’s listing on the Main Board, Mr Gao signed a custodian service agreement with AMTD Wealth1 and the subscription agreement on behalf of the Company, without knowledge and approval of the Company’s board of directors. Mr Chan, having previously reviewed the agreements, was the other director aware of the agreements when they were signed. The custodian appointment could only be terminated by mutual consent. The subscription agreement contained a term stating that the subscription’s term of 1.5 years would be automatically rolled over upon its expiry unless the investment product issuer and the Company mutually agreed otherwise, and also stated the investment product issuer could redeem the subscription unilaterally but did not provide the Company with a similar corresponding right.
IPO proceeds raised by another AMTD entity2 who was one of the Company’s sub-underwriter (HK$38.1 million, around 44.9% of the IPO proceeds) were then used for the subscription under the subscription agreement. The use of the IPO proceeds on the subscription did not adhere to the intended use as detailed in the prospectus. The roll-over of the subscription when the investment product was renewed at the end of each term constituted a discloseable transaction. However, the Company did not (i) make relevant timely disclosures in its listing documents, announcements and/or annual reports, as required under the Listing Rules, nor (ii) inform the sponsor or consult its compliance adviser.
Both Mr Gao and Mr Chan failed to apply reasonable skill, care and diligence when they reviewed the agreements. They also did not make sufficient independent enquiries. In December 2019, Mr Chan approved custodian service fees of about HK$1.1 million to AMTD Wealth.
In 2024, the Company made a provision for the outstanding balance (around HK$25.2 million).
The Company, Mr Gao and Mr Chan did not contest their respective breaches of the Listing Rules, and accepted the sanctions and directions imposed on them.
Key messages:
Directors must take sufficient proactive steps to safeguard the listed issuer’s interests and assets. In relation to the listed issuer’s proposed investments, they are expected to bring the proposed investment to the board of directors for consideration and satisfy themselves that the proposed investment is fair, reasonable and in the interest of the Company and its shareholders as a whole. Among others, this would require them to fully understand and assess the nature, the parties’ rights and obligations, and the listed issuer’s risk associated with the investment. Where appropriate, they should seek professional advice.
Where the proposed investments involve use of IPO proceeds, listed issuers and directors must ensure compliance with the Listing Rules, including the requirement to inform the sponsor, consult its compliance adviser and disclose the change in use of IPO proceeds in a timely manner.
|
Note:
- AMTD Wealth Management Solutions Group Limited, now known as Fortis, Sheriffs & Browns Asia Co. Limited.
- AMTD Global Markets Limited, now known as oOo Securities (HK) Group Limited.
Ends