Articles: Takeovers
SFC criticises Kenneth Cheung Chi Shing for breach of the Takeovers Code
| Executive Statement
SFC, 28-Mar-2023
He failed to obtain regulatory approval to become a substantial (10%) shareholder before triggering a mandatory offer obligation for Styland (0211) as part of a concert group with his family. This is not his first rodeo with the SFC.
SFC, 28-Mar-2023
He failed to obtain regulatory approval to become a substantial (10%) shareholder before triggering a mandatory offer obligation for Styland (0211) as part of a concert group with his family. This is not his first rodeo with the SFC.
SFC criticises Gao Yunhong and Feng Xuelian for breaches of the Takeovers Code
| Executive Statement
SFC, 7-Apr-2022
They caused Steering Holdings Ltd (now FDB Holdings Ltd, 1826) to sell shares of CMBC Capital (1141) in "frustrating action" during an offer period triggered when Mr Ng Kin Siu acquired control of FDB from CMBC Capital Finance Ltd, which had enforced security over a loan to Mr Gao's holding company, Gentle Soar Ltd. We note that the CMBC shares were originally subscribed on 4-Jul-2018 using a loan from Gentle Soar, 5 weeks after Gentle Soar pledged its 70% holding in FDB to CMBC Capital Finance.
SFC, 7-Apr-2022
They caused Steering Holdings Ltd (now FDB Holdings Ltd, 1826) to sell shares of CMBC Capital (1141) in "frustrating action" during an offer period triggered when Mr Ng Kin Siu acquired control of FDB from CMBC Capital Finance Ltd, which had enforced security over a loan to Mr Gao's holding company, Gentle Soar Ltd. We note that the CMBC shares were originally subscribed on 4-Jul-2018 using a loan from Gentle Soar, 5 weeks after Gentle Soar pledged its 70% holding in FDB to CMBC Capital Finance.
SFC sanctions Wonderful Sky (1260), Liu Tianni and Kiki Liu Ching Tung for breaching the Code on Share Buy-backs
| Executive Statement
SFC, 17-Mar-2022
This settlement heads off a rare disciplinary hearing of the Takeovers and Mergers Panel announced on 13-Jan-2022.
SFC, 17-Mar-2022
This settlement heads off a rare disciplinary hearing of the Takeovers and Mergers Panel announced on 13-Jan-2022.
Chong Hing Bank Ltd: privatisation by scheme of arrangement sanctioned
HK Court of First Instance, 18-Oct-2021
Citing a "lack of a meaningful response from the SFC", Justice Linda Chan appointed Winston Poon SC and Eva Sit SC as amici curiae (friends of the court) to opine on the meaning of Rule 2.10 of the Takeovers Code. In her judgment, this rule prohibits concert parties from voting at the court meeting, rather than simply requiring that their votes shall not be counted for the purposes of Rule 2.10. This is a different view that taken by Justice Jonathan Harris in the case of Cosmos Machinery Enterprises Ltd, but she regards his view as obiter (non-binding).
HK Court of First Instance, 18-Oct-2021
Citing a "lack of a meaningful response from the SFC", Justice Linda Chan appointed Winston Poon SC and Eva Sit SC as amici curiae (friends of the court) to opine on the meaning of Rule 2.10 of the Takeovers Code. In her judgment, this rule prohibits concert parties from voting at the court meeting, rather than simply requiring that their votes shall not be counted for the purposes of Rule 2.10. This is a different view that taken by Justice Jonathan Harris in the case of Cosmos Machinery Enterprises Ltd, but she regards his view as obiter (non-binding).
Cosmos Machinery Enterprises Ltd: privatisation by scheme of arrangement
HK Court of First Instance, 19-Jul-2021
The scheme was not approved by shareholders, but Justice Jonathan Harris addresses the issue of whether concert parties should be allowed to vote at the court meeting, with their votes being disregarded for the purpose of Takeovers Code Rule 2.10. He concludes that they should: "the Non-Prohibition View is the correct position… Had the necessary majority been obtained, the offeror concert parities shareholders’ votes would not have been counted for the purposes of determining whether or not Rule 2.10 had been satisfied."
HK Court of First Instance, 19-Jul-2021
The scheme was not approved by shareholders, but Justice Jonathan Harris addresses the issue of whether concert parties should be allowed to vote at the court meeting, with their votes being disregarded for the purpose of Takeovers Code Rule 2.10. He concludes that they should: "the Non-Prohibition View is the correct position… Had the necessary majority been obtained, the offeror concert parities shareholders’ votes would not have been counted for the purposes of determining whether or not Rule 2.10 had been satisfied."
Independent shareholders veto Tongda Hong Tai (2363) Whitewash Waiver
The largest shareholder wanted to underwrite a 1:1 open offer of new shares, potentially obtaining majority control without making a General Offer. Howel Thomas and his Wykeham Capital Asia Value Fund made sure that didn't happen, using the 75% approval requirement introduced in 2018. (16-Nov-2020)
The largest shareholder wanted to underwrite a 1:1 open offer of new shares, potentially obtaining majority control without making a General Offer. Howel Thomas and his Wykeham Capital Asia Value Fund made sure that didn't happen, using the 75% approval requirement introduced in 2018. (16-Nov-2020)
SFC cold-shoulders Lisa Ngai Lai Ha, CEO of IHR (1373) for 18 months for breaching Takeovers Code
| Executive Statement
SFC, 2-Nov-2020
She has reached a settlement which avoids a public disciplinary hearing against her, which the SFC launched on 16-Sep-2020.
SFC, 2-Nov-2020
She has reached a settlement which avoids a public disciplinary hearing against her, which the SFC launched on 16-Sep-2020.
HK Judge misreads HK company law
HK Court of First Instance, 9-Oct-2020
Justice Linda Chan rejects the Allied Props (0056) privatisation, partly because of the voting headcount. Neither she nor Senior Counsel William Wong, leading 2 more barristers, realise that the headcount on privatisations was scrapped years ago. She also dislikes that part of the payout was coming from Allied Properties itself, and there would be no such dividend if the scheme was rejected. The offer was at a 66% discount to NAV but was 99% approved as minority shareholders again threw in the towel, which says something about the state of corporate governance in HK.
HK Court of First Instance, 9-Oct-2020
Justice Linda Chan rejects the Allied Props (0056) privatisation, partly because of the voting headcount. Neither she nor Senior Counsel William Wong, leading 2 more barristers, realise that the headcount on privatisations was scrapped years ago. She also dislikes that part of the payout was coming from Allied Properties itself, and there would be no such dividend if the scheme was rejected. The offer was at a 66% discount to NAV but was 99% approved as minority shareholders again threw in the towel, which says something about the state of corporate governance in HK.
SFC starts disciplinary proceedings against Lisa Ngai Lai Ha, CEO of IHR (1373) for alleged breach of Takeovers Code
SFC, 16-Sep-2020
SFC, 16-Sep-2020
Independent shareholders veto 2:1 rights issue at Neway (0055)
Company announcement, 4-May-2020
Good to see. Since 13-Jul-2018, "whitewash waivers" under the Takeovers Code require a 75% approval, to allow someone to take control without making a general offer. The vote was only 73.23% in favour, so it failed. Every vote counts!
Company announcement, 4-May-2020
Good to see. Since 13-Jul-2018, "whitewash waivers" under the Takeovers Code require a 75% approval, to allow someone to take control without making a general offer. The vote was only 73.23% in favour, so it failed. Every vote counts!
AV Concept (0595) "clarifies" shareholdings
Company announcement, 30-Dec-2019
Importantly, Chairman So Yuk Kwan increased his holding by 25m shares (3.23%) "in June 2017", when the shares were "held by a friend" on trust. This appears to breach the Creeper Rule of 2% per year, triggering a mandatory general offer at the highest price paid in the prior 6 months. It may relate to a disposal by Central Investments Ltd on 8-Jun-2017, at an undisclosed price. The adjusted highest known price paid by Mr So in the 6 months prior was $0.4917 ($0.59 before a bonus issue).
Company announcement, 30-Dec-2019
Importantly, Chairman So Yuk Kwan increased his holding by 25m shares (3.23%) "in June 2017", when the shares were "held by a friend" on trust. This appears to breach the Creeper Rule of 2% per year, triggering a mandatory general offer at the highest price paid in the prior 6 months. It may relate to a disposal by Central Investments Ltd on 8-Jun-2017, at an undisclosed price. The adjusted highest known price paid by Mr So in the 6 months prior was $0.4917 ($0.59 before a bonus issue).
Decision on shareholdings of TVB (0511)
HK Communications Authority, 27-Sep-2019
In amazing legal contortions, the CA revokes its 2015 and 2016 approvals but issues new approvals based on new, unpublished "deeds of undertaking" and "statutory declarations" that although Dr Chan does not control the majority of the board of YHL, there is an "understanding and practice… that he would lead the YHL Board in relation to how votes in TVB were to be exercised". Therefore, mainland firm CMC and Mr Li Ruigang are not voting controllers of TVB, despite various rights in a "Relationship Agreement" that was not disclosed earlier. The decision follows a referral by the SFC.
HK Communications Authority, 27-Sep-2019
In amazing legal contortions, the CA revokes its 2015 and 2016 approvals but issues new approvals based on new, unpublished "deeds of undertaking" and "statutory declarations" that although Dr Chan does not control the majority of the board of YHL, there is an "understanding and practice… that he would lead the YHL Board in relation to how votes in TVB were to be exercised". Therefore, mainland firm CMC and Mr Li Ruigang are not voting controllers of TVB, despite various rights in a "Relationship Agreement" that was not disclosed earlier. The decision follows a referral by the SFC.
SFC censures Mr Zhang Qiang for Takeovers Code breach
SFC, 20-Dec-2017
For purchasing shares of FS Nonmetal (8331) above his offer price within 6 months after his offer closed. We note that despite owning 49.93%, he does not sit on the board, so he does not have to disclose his dealings unless he moves through a 1% threshold.
SFC, 20-Dec-2017
For purchasing shares of FS Nonmetal (8331) above his offer price within 6 months after his offer closed. We note that despite owning 49.93%, he does not sit on the board, so he does not have to disclose his dealings unless he moves through a 1% threshold.
TVB (0511) v Takeovers and Mergers Panel
HK Court of First Instance, 4-Oct-2017
Note: the word "waiver" is misspelt "wavier" 3 times in this judgment.
HK Court of First Instance, 4-Oct-2017
Note: the word "waiver" is misspelt "wavier" 3 times in this judgment.
SFC censures Chen Chi Te and Kenneth Lo Chin Ming
SFC, 7-Sep-2017
The 2 directors of Taiwan Cement Corp failed to disclose their share dealings during a privatisation offer period for TCC International (1136).
SFC, 7-Sep-2017
The 2 directors of Taiwan Cement Corp failed to disclose their share dealings during a privatisation offer period for TCC International (1136).
SFC bans Mr Yeung Wing Yee from market for 2 years
SFC, 30-Aug-2017
He bought over 30% of Union Asia Enterprise (8173) but failed to make a general offer.
SFC, 30-Aug-2017
He bought over 30% of Union Asia Enterprise (8173) but failed to make a general offer.
Takeovers Panel’s ruling on TVB (0511) whitewash waiver and disclosure of shareholding structure
SFC, 10-May-2017
SFC, 10-May-2017
Union Asia Ent (8173): Mr Yeung Wing Yee breaches Takeovers Code
Company announcement, 8-Aug-2016
He's bought 32.87%, more than the 30% bid trigger, and his "legal adviser" has confirmed that he has no intention to make a general offer. The SFC is on the case.
Company announcement, 8-Aug-2016
He's bought 32.87%, more than the 30% bid trigger, and his "legal adviser" has confirmed that he has no intention to make a general offer. The SFC is on the case.
Principles of Responsible Regulation
Webb-site calls on the SFC, Government and HKEx to get serious about facilitating investor stewardship. Principles of Responsible Ownership are only useful if regulators address the deficiencies in Hong Kong's governance framework for listed companies. We call on readers to make a submission and support our proposed Principles of Responsible Regulation. (26-May-2015)
Webb-site calls on the SFC, Government and HKEx to get serious about facilitating investor stewardship. Principles of Responsible Ownership are only useful if regulators address the deficiencies in Hong Kong's governance framework for listed companies. We call on readers to make a submission and support our proposed Principles of Responsible Regulation. (26-May-2015)
Alibaba's spotlight on HK regulation
10 years after the Expert Group report, Alibaba's requests spotlight the unresolved conflict of interests of HKEx between profit and regulation, creating an opportunity for Government to put this back on the agenda. They should now follow through, strip HKEx of its regulatory role, create a Listings and Takeovers Authority under the SFC, and remove the special provisions of HKEx's own constitution which make it a Government-controlled company. (18-Sep-2013)
10 years after the Expert Group report, Alibaba's requests spotlight the unresolved conflict of interests of HKEx between profit and regulation, creating an opportunity for Government to put this back on the agenda. They should now follow through, strip HKEx of its regulatory role, create a Listings and Takeovers Authority under the SFC, and remove the special provisions of HKEx's own constitution which make it a Government-controlled company. (18-Sep-2013)
Takeovers Panel rules offer for Greenheart (0094) will be triggered by Sino-Forest restructuring
SFC, 1-Feb-2013
SFC, 1-Feb-2013
SFC sanctions Capital VC and Peter Yau Chung Hong
| Our article of 14-Aug-2011
SFC, 22-May-2012
This case was triggered by Webb-site's article of 14-Aug-2011, when we pointed out that an offer should have been made for Longlife (8037). We regard the 18-month "Cold Shoulder Order" as light in duration. The statement says nothing about the fact that Mr Yau and Longlife combined held more than 30% of Capital VC (2324). Meanwhile, Mr Yau is involved in a separate case with the Market Misconduct Tribunal where a ruling is awaited.
SFC, 22-May-2012
This case was triggered by Webb-site's article of 14-Aug-2011, when we pointed out that an offer should have been made for Longlife (8037). We regard the 18-month "Cold Shoulder Order" as light in duration. The statement says nothing about the fact that Mr Yau and Longlife combined held more than 30% of Capital VC (2324). Meanwhile, Mr Yau is involved in a separate case with the Market Misconduct Tribunal where a ruling is awaited.
Takeovers Panel requires Offerors for China Gas Holdings Limited to make clarification announcement
SFC, 12-Apr-2012
SFC, 12-Apr-2012
Decapitate the headcount
We make the case for abolition of the archaic and anarchic headcount rule in Schemes of Arrangement, which was brought into focus when we reported evidence of a vote-rigging scheme in the proposed PCCW privatisation in 2009. For once, the tycoons agree with us, but the Government seems afraid to take the lead. (12-Mar-2012)
We make the case for abolition of the archaic and anarchic headcount rule in Schemes of Arrangement, which was brought into focus when we reported evidence of a vote-rigging scheme in the proposed PCCW privatisation in 2009. For once, the tycoons agree with us, but the Government seems afraid to take the lead. (12-Mar-2012)
SFC criticises Fidelity Worldwide Investment for breaches of Takeovers Code
SFC, 7-Nov-2011
The Fidelity people must be feeling a little sheepish about that.
SFC, 7-Nov-2011
The Fidelity people must be feeling a little sheepish about that.
Apology of Mr Koo Ming Kown, non-executive Chairman of NTEEP
Company announcement, 19-May-2009
...for trying to privatise NTEEP by winding it up
Company announcement, 19-May-2009
...for trying to privatise NTEEP by winding it up
Takeover Panel decision against waiver of general offer obligation for HAECO.
SFC, 10-Dec-2008
Note:The Panel deferred the publication of its decision at the request of Swire Pacific Ltd due to the confidential and price-sensitive nature of the matter at the time. It was published on 19-Jan-2009.
SFC, 10-Dec-2008
Note:The Panel deferred the publication of its decision at the request of Swire Pacific Ltd due to the confidential and price-sensitive nature of the matter at the time. It was published on 19-Jan-2009.
Takeover Code Amended
At 00:01 this morning, the SFC released major amendments to the takeover code following the market consultation earlier this year. The amendments are effective immediately. Readers of Webb-site.com contributed to this process by making a substantial number of submissions to the SFC, the vast majority of which supported our views. And now the first results are out, and they represent a victory for the public shareowner. (19-Oct-2001)
At 00:01 this morning, the SFC released major amendments to the takeover code following the market consultation earlier this year. The amendments are effective immediately. Readers of Webb-site.com contributed to this process by making a substantial number of submissions to the SFC, the vast majority of which supported our views. And now the first results are out, and they represent a victory for the public shareowner. (19-Oct-2001)
Takeover Code Consultation
This article contains the views of Webb-site.com on the SFC's review of the Takeover Code and Share Repurchase Code. We've fought for several of the proposals for a long time, and broadly welcome the paper. We also tell you where the SFC has gone wrong, and finally focus on a solution to the poor quality of so-called independent advice on takeovers and connected transactions. Read our views, decide whether you agree, then SUBMIT YOUR VIEW to the SFC using our special form. (6-May-2001)
This article contains the views of Webb-site.com on the SFC's review of the Takeover Code and Share Repurchase Code. We've fought for several of the proposals for a long time, and broadly welcome the paper. We also tell you where the SFC has gone wrong, and finally focus on a solution to the poor quality of so-called independent advice on takeovers and connected transactions. Read our views, decide whether you agree, then SUBMIT YOUR VIEW to the SFC using our special form. (6-May-2001)
Webb appointed to Takeover Panel
The Hong Kong Securities and Futures Commission has announced that Webb-site.com Editor David Webb is among seven new members appointed to the Takeovers and Mergers Panel and the Takeovers Appeal Committee. (6-Apr-2001)
The Hong Kong Securities and Futures Commission has announced that Webb-site.com Editor David Webb is among seven new members appointed to the Takeovers and Mergers Panel and the Takeovers Appeal Committee. (6-Apr-2001)
Hobson's Choice on Privatisations
Webb-site.com highlights a growing trend for controlling shareholders to threaten minority shareholders with the following choice: take our undervalued offer, or risk having your shares delisted anyway, and losing the regulatory protection and liquidity of the stock market. We call for a change in the Listing Rules that make this possible, and we also deal with the obsolete requirement for a 25% free float rather than just a minimum dollar value. (14-Jan-2001)
Webb-site.com highlights a growing trend for controlling shareholders to threaten minority shareholders with the following choice: take our undervalued offer, or risk having your shares delisted anyway, and losing the regulatory protection and liquidity of the stock market. We call for a change in the Listing Rules that make this possible, and we also deal with the obsolete requirement for a 25% free float rather than just a minimum dollar value. (14-Jan-2001)
HK's Takeunder Code
Three recent "takeunders" of Beauforte Investors, China Internet Global Alliance and Tung Fong Hung have reminded investors how ineffective Hong Kong's takeover code is. In each case, a buyer has been willing to pay a substantial premium for a stake which, while under 35%, is clearly enough to achieve control without making a general offer. Webb-site.com urges the SFC to reduce the threshold for these "takeunder" transactions. (18-Dec-2000)
Three recent "takeunders" of Beauforte Investors, China Internet Global Alliance and Tung Fong Hung have reminded investors how ineffective Hong Kong's takeover code is. In each case, a buyer has been willing to pay a substantial premium for a stake which, while under 35%, is clearly enough to achieve control without making a general offer. Webb-site.com urges the SFC to reduce the threshold for these "takeunder" transactions. (18-Dec-2000)
Decision in relation to Kong Tai and cold shoulder order against David Wong Wai Chi
HK Takeovers and Mergers Panel, 24-Jun-1999
HK Takeovers and Mergers Panel, 24-Jun-1999
Dismissal of appeal of Danny Chan Tak Tim and Jim Wong Tin Yue
HK Takeovers Appeal Committee, 25-Mar-1999
HK Takeovers Appeal Committee, 25-Mar-1999
Statement regarding Mr William Cheng Kai Man and Cold-shoulder Order
HK Takeovers and Mergers Panel, 29-Nov-1995
HK Takeovers and Mergers Panel, 29-Nov-1995
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