HKEx LISTING ENFORCEMENT GUIDANCE LETTER
Cite as HKEx-LEGL07-08 (December 2008)
|Listing Rule||GEM Listing Rules 17.11 and 17.56(2)|
|Subject||Guidance on replying to unusual trading movement enquiries from the Stock Exchange of Hong Kong and ensuring accuracy in the subsequent announcements when there are ongoing business negotiations relating to intended acquisitions or realizations|
|Contents||Extracts of a No Further Action (Guidance) letter from the authorised signatory of the Stock Exchange of Hong Kong|
[Name and Address of Listed Issuer]
[Name of Listed Issuer] (the "Company", together with its subsidiaries, the "Group")
No Further Action: Guidance
The Listing Division ("Division") refers to earlier correspondence concerning the captioned matter resting with your letter dated [*day *month *year]. Capitalized terms used in this letter have the same meanings as they are defined in the Company's announcements dated [*day *month *year] and [*day *month *year], unless otherwise stated.
The Division refers to the following materials which have been reviewed:
Thank you for the information and materials provided by the Company and the Relevant Directors which enable the Division to have a clearer understanding of the matter.
The submissions from the Company and the Relevant Directors referred to above received during the course of our investigation into this matter revealed that the Relevant Directors had been in negotiation with an independent third party regarding different forms of business cooperation since early [*month *year]. In early [*month], the independent third party made a unilateral Proposal, in draft form, to the Relevant Directors in relation to the acquisitions of a majority interest in the Company. As the Proposal had yet to be discussed between the parties concerned, the Relevant Directors considered the Proposal to be preliminary and that the Company was not under any obligation to disclose the Proposal in the First Announcement.
Based on the materials available, the Division is of the view that there is prima facie evidence that the First Announcement was not accurate and complete in all material respects as required by GLR17.56(2) because it contained a confirmation that there were no negotiations relating to intended acquisitions or realizations which were discloseable under Chapters 19 to 20 of the GLR which does not appear to have been the case.
Having reviewed the materials made available to the Division, the Division is of the view that the inaccurate and incomplete disclosure in the First Announcement may in other circumstances have led to disciplinary action against the Company and the Relevant Directors.
Further, the Relevant Directors remain liable for actions they took as directors of the Company despite their subsequent resignation from the Board, and disciplinary action could be taken against them subsequent to their resignation.
However, the Division has decided not to take any further disciplinary action. In coming to this decision the Division has taken into account the following factors and conduct subsequent to the events in question.
The Division notes that in respect of what we believe to be the inaccurate and incomplete disclosure in the First Announcement, the Relevant Directors were prompt in taking remedial actions, including the request for suspension in trading of the Company's shares pending publication of a clarification announcement, and the publication of the Second Announcement. As a result, there was no trading in the Company's shares between the publication of the First Announcement and the Second Announcement and in the circumstances the First Announcement made may not have impacted on shareholders to a significant degree.
The Division has also noted the subsequent change in control and complete change in Board composition of the Company since the conduct covered by our investigation. We note however that the information available to us indicates that the Relevant Directors (i.e. those in office at the material time) are still currently occupying management positions within the Group.
It should be noted that our decision is not and should not be interpreted as an agreement on the Company's assessment of the price-sensitivity of the relevant matters or an endorsement in any way of the Company's conduct in this case. Please also note that our decision in this case is based on the facts and circumstances prevailing at the material time, and does not serve as a precedent for other cases or apparently similar factual scenarios which given the passage of time or difference in circumstances may be treated differently.
We invite the board of Directors of the Company and the Relevant Directors to comment on this letter if they wish. Your submission, together with this letter, will be placed on the compliance files of the Company and the Relevant Directors. No further action will be taken in respect of this matter which is now considered closed.
We wish to inform you that, at an appropriate time, the Division may, in the discharge of its regulatory function, publicize certain facts and guidance given in this letter. This would be done on an anonymous and redacted basis, to explain our views on the issues raised by this case for the benefit of the market as a whole. If such disclosure is made it may be published on our website and in our quarterly publication "Exchange".
For and on behalf of
The Stock Exchange of Hong Kong Limited