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Hong Kong – Enforcement News.

13 May 2012

 

Chairman and Executive Director Ordered to Pay HK$85 Million Compensation to Company

 

In March 2012, the Court of First Instance ordered the founder and former chairman of Styland Holdings Ltd (“Styland”) and his wife, a former executive director, to pay compensation totaling over HK$85 million to the company for their misconduct and disqualified them from acting as a company director for 12 years each. 
 
This is the first time a compensation order has been made directly in proceedings brought by the SFC under section 214 of the SFO, and both directors received the longest disqualification orders ever to be imposed in such proceedings. 
 
It was alleged Styland entered into a number of transactions which were not properly disclosed or approved by Styland and its shareholders as required, causing loss and damage to the company and its shareholders, but directly or indirectly benefitting the founder and his wife. The pair is alleged to have received financial benefits totaling HK$79 million and HK$6.95 million, respectively. 
 
For a copy of the judgment, please follow the link:
 
Failure to Disclose Securities 
Dealings as Required by the Takeovers Code
 
In March 2012, the SFC publicly criticized Penta Investment Advisers Limited for breaches of the Takeovers Code as a result of its failure to disclose its dealings in certain Hong Kong-listed securities during their relevant offer periods. 
 
This is a reminder that practitioners and parties should conduct themselves in matters relating to takeovers and mergers in accordance with the Takeovers Code, and particularly, associates must report their dealings in the offeree company (or offeror company in the case of a securities exchange offer) during an offer period in accordance with the Takeovers Code.
 
For a copy of the Executive Statement, please follow the link:
 
INED Convicted of Insider Dealing
 
In February 2012, a former independent non-executive director of Hong Kong Aircraft Engineering Company Limited (HAECO) was found guilty of insider dealing and sentenced to five months’ imprisonment, suspended for two years, and fined HK$50,000.
 
The director bought 4,000 HAECO shares after being told by the chief executive officer of HAECO about a proposal in which Cathay Pacific Airways Limited, a substantial shareholder of HAECO, would sell all its HAECO shares to Swire Pacific Limited (“Swire”), which would trigger a general offer obligation by Swire. 
 
The deal, when announced, valued HAECO shares approximately 25% 
higher than the then-market price. The director made a profit of approximately HK$80,000. 
 

 

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