Market Turnover
-






-
-
|
|
|
|
|
|
-
-
-
Loading

Exchange’s Disciplinary Action against China Fortune Holdings Limited (Stock Code: 110) and Eight Directors

Regulatory
31 Oct 2023

香港联合交易所有限公司
(香港交易及结算所有限公司全资附属公司)
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:
(1) China Fortune Holdings Limited (stock code: 110); 

IMPOSES A DIRECTOR UNSUITABILITY STATEMENT against:
(2) Mr Gao Fei, former executive director;

CENSURES:
(3) 
Mr Lau Siu Ying, executive director, chairman and chief executive officer;
(4) Mr Wang Yu, executive director;

AND CRITICISES:
(5) Mr Bao Kang Rong, former non-executive director;
(6) Dr Law Chun Kwan, independent non-executive director;
(7) Dr Lo Wai Shun, independent non-executive director;
(8) Mr Lam Man Kit, former independent non-executive director; and
(9) Mr Chang Wing Seng Victor, former independent non-executive director.

AND FURTHER DIRECTS:
(10) the appointment of a Compliance Adviser for two years;
(11) a review of the Company’s internal controls; and
(12) training for directors.

The statement made in respect of Mr Gao Fei is made in addition to a public censure against him. The Director Unsuitability Statement is a statement that, in the Exchange’s opinion, Mr Gao Fei is unsuitable to occupy a position as director or within senior management of the Company or any of its subsidiaries.

 

Between 2014 and 2019, the Company entered into a number of connected transactions via its subsidiaries. The Company failed to comply with the disclosure and procedural requirements under the Listing Rules for these transactions. For details of the connected transactions, please refer to the Statement of Disciplinary Action (see link below).

The Company’s internal controls and supervision over its subsidiaries were seriously deficient. There were no reporting procedures or mechanisms in place to ensure the Company was kept apprised of the subsidiaries’ affairs, and no systems for checks and balances over the exercise of power by the subsidiaries.

The Company had previously been warned by the Exchange for a breach of the Listing Rules relating to connected transactions. The directors should then have sought to identify any inadequacies in the Company’s controls and take remedial action, but they failed to do so.

The Company and the Relevant Directors agreed to settle this disciplinary action. They admitted their respective breaches, and accepted the sanctions and directions imposed on them by the Listing Committee.

Key messages:

The board of directors must ensure that effective reporting procedures and mechanisms are in place to enable them to properly oversee the activities of a listed issuer’s subsidiaries.  A robust internal control framework is also essential to ensure Listing Rule compliance.

Following any breach of the Listing Rules, the directors must proactively take steps to investigate, remediate, and ensure there is no further non-compliance.

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

 

 

Ends