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SFC commences disciplinary proceedings against Wonderful Sky Financial Group Holdings Limited and others for alleged breach of the Share Buy-backs Code

Issue date: 2022-01-13 17:05:42

The Takeovers Executive (Note 1) today commenced disciplinary proceedings before the Takeovers and Mergers Panel (Takeovers Panel) against Wonderful Sky Financial Group Holdings Limited (Note 2), Liu Tianni and Liu Kiki Ching Tung over a breach of the Code on Share Buy-backs (Share Buy-backs Code).

The SFC alleges that in March 2020, Wonderful Sky bought back 42,500,000 shares by way of a block-trade which was pre-arranged and pre-agreed between Wonderful Sky and the vendor. This constituted an off-market share buy-back which required the Takeovers Executive’s approval and the approval of Wonderful Sky’s disinterested shareholders, neither of which was obtained (Note 3).

Liu Tianni, as the Chairman, Chief Executive Officer and an executive director of Wonderful Sky, was the main decision maker for the buy-back. Liu Kiki Ching Tung was a deputy general manager of Wonderful Sky and had participated extensively in implementing the buy-back.

If the Takeovers Panel finds that there was a breach of the Share Buy-backs Code, it is empowered to issue a range of sanctions including imposing a “cold shoulder order” which would deny the person being sanctioned direct or indirect access to the Hong Kong securities markets for a period of time (Note 4).

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Notes:

1. The Takeovers Executive refers to the Executive Director of the Corporate Finance Division of the Securities and Futures Commission (SFC) or any delegate of the Executive Director.
2. The shares of Wonderful Sky (stock code: 1260) have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 2012. Wonderful Sky and its subsidiaries are principally engaged in the provision of financial public relations services and the organisation and coordination of international roadshows.
3. Rule 1 of the Share Buy-backs Code provides that “a company may only engage in the following types of share buy-back:– (a) an on-market share buy-back; (b) an off-market share buy-back approved in accordance with Rule 2”. Rule 2 provides that “off-market share buy-backs must be approved by the Executive before a repurchasing company acquires any shares pursuant to such share buy-back. Such approval will normally be conditional upon the following:– (a) approval of the proposed off-market share buy-back by at least three-fourths of the votes cast on a poll by disinterested shareholders in attendance in person or by proxy at a general meeting of shareholders duly convened and held to consider the proposed transaction”. Rule 2 of the Share Buy-backs Code is derived from, amongst other things, General Principle 1 of the Codes on Takeovers and Mergers and Share Buy-backs and the fundamental requirement that “all shareholders are to be treated even-handedly and all shareholders of the same class are to be treated similarly”.
4. The disciplinary proceedings will be held in public. Details of the proceedings can be found in the “Regulatory functions – Corporates – Takeovers and mergers – Disciplinary proceedings before the Takeovers Panel” section of the SFC website. The procedures for disciplinary hearings before the Takeovers Panel are set out in section 13 of the Introduction to the Codes on Takeovers and Mergers and Share Buy-backs and in the Rules of procedure for disciplinary hearings.

News captured as of:2022-01-13 17:05:42

Source: SFC