HK securities regulator stays tough on disclosure breaches

The Market Misconduct Tribunal (MMT) on 5 April 2017 fined Mayer Holdings and nine of the company’s current and former senior executives a total of HK$10.2 million (US$1.3 million) for their breaches of the disclosure obligations under the Securities and Futures Ordinance (SFO) and disqualified them from being directors or being involved in the management of a listed corporation for up to 20 months. The relevant breaches included failure to disclose certain audit issues affecting Mayer and a delay of more than three weeks in disclosing the auditors’ resignation.

This recent decision demonstrates the MMT’s readiness to impose tough sanctions for breaches of the statutory corporate disclosure laws. Officers or senior management of listed companies are under statutory duties to take all reasonable measures to ensure that proper safeguards exist to prevent the breach of disclosure requirements by listed companies.

Earlier in February 2017, the MMT sanctioned another listed company, Yorkey Optical International (Cayman), its CEO and financial controller for their breaches of the disclosure requirements. The MMT found that there was a 13-week delay in Yorkey’s disclosure of its material losses as a result of the reckless conduct of its officers. The company and the CEO were each fined HK$1 million.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com