For the year ended 31 December 2018

(1) Investigations

This table shows the number of investigations carried out by the Enforcement Team during 2018 (as compared to 2017).

	Twelve months ended 31/12/2018⁽¹⁾			Twelve months ended 31/12/2017⁽¹⁾
	MB	GEM	Total	MB	GEM	Total
Investigations	87	24	111	65	21	86
Cases involving:
Company	81	21	102	54	18	72
Current directors	17	8	25	17	10	27
Former directors	33	13	46	27	10	37
Three Listing Rule breaches (or less)	54	14	69	38	13	51
More than three Listing Rule breaches	33	10	43	27	8	35
Investigations involving, and referrals to, other regulators⁽²⁾	41	6	47	24	6	30

⁽¹⁾	Figures cover all cases investigated during the period (both concluded cases and cases that remain ongoing).
⁽²⁾	Referrals do not include those involving solely possible breach of the Inside Information provisions of the Securities and Futures Ordinance.

(2) Issues under Investigation

The Enforcement Team has adopted a thematic approach to enforcement activity since 2014. Whilst the Enforcement Team will continue to pursue any breach of the Listing Rules (as per the Enforcement Policy Statement), during 2018, 91% of all investigations related to one or more of the enforcement themes identified below.

ISSUES	Twelve months ended 31/12/2018⁽¹⁾			Twelve months ended 31/12/2017⁽¹⁾
	MB	GEM	Total	MB	GEM	Total
ENFORCEMENT THEMES⁽²⁾
(1) Directors’ duties	28	7	35	12	4	16
(2) Failure to cooperate with an Exchange investigation	4	1	5	8	2	10
(3) Inaccurate, incomplete and/or misleading disclosure in corporate communication	2	0	2	4	1	5
(4) Failure to comply with procedural requirements in respect of notifiable/connected transactions	6	1	7	6	1	7
(5) Repeated breaches of the Listing Rules	0	1	1	0	1	1
(6) Delayed trading resumption	0	0	0	0	0	0
(7) Financial reporting - delays, or internal controls and corporate governance issues	1	0	1	0	0	0
MULTIPLE THEMES⁽³⁾	38	12	50	29	10	39
OTHERS:
Other Listing Rules not falling into any of the above categories	8	2	10	6	2	8

⁽¹⁾	Figures cover all cases investigated during the period (both concluded cases and cases that remain ongoing).
⁽²⁾	Enforcement themes represent those that are the main focus of an investigation (whether or not it involves other issues). An investigation covering more than one enforcement theme will be disclosed under multiple themes.
⁽³⁾	Number of investigations during the period under multiple themes involving Theme (1): (2018: 41; 2017: 30); Theme (2): (2018: 3; 2017: 2); Theme (3): (2018: 17; 2017: 18); Theme 4: (2018: 23; 2017: 20); Theme 5: (2018: 7; 2017: 7); Theme 6: (2018: 4; 2017: 2); Theme 7: (2018: 24; 2017: 15).

(3) Outcome of Enforcement Actions by Listing Committee and Enforcement

	Twelve months ended 31/12/2018			Twelve months ended 31/12/2017
	MB	GEM	Total	MB	GEM	Total
Sanctions imposed⁽¹⁾
Public censures	14	7	21	7	1	8
Public statements involving criticism	0	0	0	1	0	1
Other public statements⁽²⁾	1	2	3	0	0	0
Private reprimands	0	0	0	0	0	0
Directions involving⁽³⁾:
Internal Control Review	1	1	2	0	0	0
Retention of Compliance Advisor	2	6	8	1	0	1
Training of Directors	6	6	12	4	0	4
Warning/ caution letters issued by Enforcement only	11	3	14	8	1	9
Average time for completion of an investigation in 2018 (from commencement of investigation to the decision as to the regulatory action to be taken) was 9 months.⁽⁴⁾

⁽¹⁾	These figures represent the primary regulatory sanction imposed in a disciplinary action and save for (2) below, do not include other sanctions that may be imposed in the same action.
⁽²⁾	Include Rule 2A.09(7) statement (GEM: GEM Listing Rule 3.10(7)) where, in the case of wilful or persistent failure by a director to discharge his responsibilities under the Listing Rules, the Exchange states its opinion that the retention of office by that director is prejudicial to the interests of investors; and also where the Listing Committee expresses its views that it would be minded to make such a statement had the resigned director stayed in office. These figures are in addition to and do not form part of the total number of primary regulatory sanctions imposed.
⁽³⁾	These figures represent the total number of directions given in addition to the primary regulatory sanction imposed in a disciplinary action.
⁽⁴⁾	The average time for completion of an investigation in 2017 was 9.4 months and not 8.7 months as previously disclosed.

(4) Number of Directors Subject to Disciplinary Sanctions

	Twelve months ended 31/12/2018			Twelve months ended 31/12/2017
	MB	GEM	Total	MB	GEM	Total
Executive directors	41	30	71	16	1	17
Non-executive directors	5	5	10	4	0	4
Independent non-executive directors	17	22	39	3	0	3
Total	63	57	120	23	1	24