Market Turnover


Exchange’s Disciplinary Action against China Bright Culture Group (Stock Code: 1859) and Two Current and Former Executive Directors

21 Nov 2022

(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)


The Stock Exchange of Hong Kong Limited


(1) China Bright Culture Group (Stock Code: 1859);

(2) Mr Liu Mu, executive director;


(3) Mr Xia Rui, former executive director;


Mr Liu and Mr Xia to attend training.


The Company was listed on 13 March 2020. AMTD Global Markets Limited (AMTD) acted as joint global coordinator, joint bookrunner and joint lead manager of the Company’s IPO. Proceeds from placees arranged by AMTD amounted to approximately US$70.8 million (being 66 per cent of the IPO proceeds).

On the first day of listing, the Company entered into an asset management agreement with AMTD and deposited a total of US$70.8 million into an investment portfolio account. The Company paid AMTD an upfront fee of 5 per cent of the investment amount.

There was no disclosure of this agreement in the Company’s prospectus, and the Company failed to comply with the Listing Rule requirements for major transactions.

The entire investment amount was used by AMTD to subscribe for a promissory note issued by its affiliated party. The transactions were terminated in 2021 and the Company redeemed the investment amount. The Company did not receive any interest or return, and did not receive any refund of the US$3.5 million fee that had been paid to AMTD.

The Listing Committee did not accept the explanations given by the Company, Mr Liu and Mr Xia for the circumstances around, and the commercial rationale for, the arrangement.

Key messages:

The Exchange has concluded a number of cases involving the making of substantial investments and/or payments around or shortly after an issuer’s listing, which had not been properly disclosed.

The Exchange has always considered the disclosure on the use of proceeds by newly listed issuers and the placing of shares in an IPO to be an important focus. The Joint statement on IPO-related misconduct published by the SFC and the Exchange in May 2021 reiterated the Exchange’s position in this regard.

HKEX’s Head of Enforcement, Jon Witts, said: “It is critical for newly-listed issuers to keep the investing public informed from the outset about the plans and prospects of the issuer, including transactions involving substantial outflows of money which take place around or shortly after listing. The Exchange will not hesitate to take regulatory action if the Listing Rule requirements are not met.”

A copy of the Statement of Disciplinary Action is available on the HKEX website.