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. Link Holdings Limited (Stock Code: 8237);
IMPOSES A PREJUDICE TO INVESTORS’ INTERESTS STATEMENT against:
2. Mr Ngan Iek, former chairman and executive director;
3. Datuk Siew Pek Tho, former executive director;
AND FURTHER DIRECTS:
the Company to conduct an independent internal control review.
The statement made in respect of Mr Ngan and Datuk Siew above is made in addition to a public censure against each of them. The Prejudice to Investors’ Interests Statement is a statement that, in the Exchange’s opinion, had Mr Ngan and Datuk Siew remained on the board of directors of the Company, the retention of office by them would have been prejudicial to the interests of investors.
In June 2020, the Company raised approximately $25 million by issuing some new bonds. The announced purpose for raising these funds was to redeem certain old bonds that were maturing in November 2020. However, most of the funds were instead used to repay a shareholder loan made by Mr Ngan to the Company. The Company did not then have sufficient funds to redeem the old bonds and accordingly defaulted.
There was no announcement of the change in use of the funds raised in the new bond issuance. The Company also failed to announce the default. Investors were kept in the dark.
Mr Ngan and Datuk Siew were responsible for the decision on how to use the raised funds. They are brothers-in-law. The decision to repay Mr Ngan instead of redeeming the old bonds raised a conflict of interest. However, Mr Ngan and Datuk Siew did not take any steps to avoid this conflict. They did not even inform the other directors.
Mr Ngan and Datuk Siew failed to discharge their directors’ duties. Datuk Siew also failed to discharge his duties as the Company’s compliance officer.
Key messages:
Directors must ensure that appropriate disclosures are made so that investors have the information to which they are entitled. If funds are raised for a stated purpose, and circumstances change, then this should be properly considered by the board and investors informed of any proposed change in use.
Directors must also take care in managing any conflicts of interests, particularly when company’s funds are to be paid to a director personally, even if the director is entitled to the funds under a contract. At the very least, the other directors should be informed and involved in the process.
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