The Securities and Futures Commission (SFC) has obtained disqualification orders in the Court of First Instance against the former chairman and executive director, Mr Li Wing Sang; and two former executive directors, Mr Liu Xinsheng and Mr Chiu Chi Hong, of Tech Pro Technology Development Limited (Tech Pro) for breaching their duties in failing to properly manage the company’s investment through a joint venture with a Mainland partner (Notes 1 and 2).
Li and Liu, who were also the director and supervisor of the joint venture respectively, were disqualified for a period of seven years from being a director, liquidator, receiver or manager, and being involved in the management of any listed or unlisted corporation in Hong Kong. Meanwhile, Chiu, who did not hold any position in the joint venture, was disqualified for a period of four years. The trio was also ordered to pay the SFC’s costs in the proceedings (Notes 3 and 4).
The SFC’s investigation revealed that the three directors failed to obtain sufficient control and supervision over the joint venture and left the daily management to the Mainland partner, who as a result was able to misappropriate over RMB300 million from the joint venture. The Mainland partner also failed to settle the outstanding rent for a building in Shanghai, resulting in a Mainland court ordering the termination of the joint venture’s sub-leasing right for the building (ie, the principal asset of the joint venture), effectively wiping out the value of Tech Pro’s investment in the joint venture. Nevertheless, the trio was unaware of the Mainland court order and the relevant legal proceedings.
The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “As executive directors of the company, they should be responsible and accountable for managing the financial and operational status of the joint venture. Any delegation of the management of the joint venture to the Mainland partner would not exonerate their fiduciary duties and obligation to act in the best interests of the company and safeguard its assets.”
“These judgments reinforce the SFC’s commitment to upholding the highest standards of corporate governance and individual accountability in protecting the interests of investors and ensuring market integrity.” Mr Wilson added.
End
Notes:
Tech Pro, together with its subsidiaries, were principally engaged in the manufacture and sale of LED lighting products and accessories. Tech Pro was listed on the Main Board of the Stock Exchange of Hong Kong Limited on 6 September 2007 and delisted on 2 March 2020.
The legal proceedings were commenced under section 214 of the Securities and Futures Ordinance to seek disqualification orders against the three directors. Please see the SFC’s press release dated 14 November 2023.
The orders against Liu and Chiu were made following the Court’s approval for the proceedings against them to be disposed of by way of the Carecraft procedure where the Court determined the appropriate orders to be made based on an agreed statement of facts and agreed proposed orders.
The respective judgments against the three directors are available on the Judiciary’s website (Case No.: HCMP 2068/2020).
Comments