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SFC publicly censures Wonderful Sky Financial Group Holdings Limited and Liu Tianni and publicly criticises Liu Kiki Ching Tung for breaching the Code on Share Buy-backs

Issue date: 2022-03-17 16:53:56

The Securities and Futures Commission (SFC) has publicly censured Wonderful Sky Financial Group Holdings Limited (Note 1) and Liu Tianni and publicly criticised Liu Kiki Ching Tung for breaching the Code on Share Buy-backs.

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 approval of the Takeovers Executive (Note 2) and 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 at the material time and participated in implementing the buy-back under Liu Tianni’s instructions.  

All the parties accepted that they failed to comply with the Code on Share Buy-backs and consented to the disciplinary action taken against them.

The SFC wishes to take this opportunity to remind practitioners and parties who wish to take advantage of the securities markets in Hong Kong that they should conduct themselves in accordance with the Codes on Takeovers and Mergers and Share Buy-backs (the Codes). The Takeovers Executive expects persons who are actively engaged in the securities market to comply with the Codes and this includes seeking professional advice as and when needed. If there is any doubt about the application of the Codes, the Takeovers Executive should be consulted at the earliest opportunity.

The Executive Statement can be found in the “Regulatory functions – Corporates – Takeovers and mergers – Decisions and statements – Executive decisions and statements” section of the SFC’s website.

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Notes:

1. 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.
2. The Takeovers Executive refers to the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director.
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”.

Source: SFC