Editor’s Note
This article highlights the regulatory importance of adhering to share option grant restrictions under Rule 23.05 of the GEM Listing Rules. Issuers are reminded to consult their Compliance Adviser to ensure compliance and avoid actions that could undermine market fairness and order.
Rule 23.05 of the Rules Governing the Listing of Securities on GEM of the Exchange (the “GLRs”) restricts issuers from granting share options during prescribed black-out periods or when the issuers possess inside information. Breaching this rule raises regulatory concerns regarding the fair treatment of existing shareholders and an orderly market for securities trading.
Issuers should maintain regular contact with their Compliance Adviser and keep it appraised of developments and proposed corporate actions during the fixed period as defined by GLR 6A.01(4). They should also proactively discuss and seek confirmation from their Compliance Adviser in a timely manner on whether a proposed corporate action is subject to a GLR obligation.
Consultation with legal or financial advisers does not exonerate an issuer from its obligation to consult its Compliance Adviser on a timely basis in the circumstances specified in GLR 6A.23. If they have any doubt as to the relevant GLR requirements, the issuer and its directors should consult the Exchange.
Failure to timely disclose accurate, complete and not misleading information prejudices the interests of the issuer’s shareholders and public investors, and destroys transparency, trust and confidence in the market, and may warrant public sanctions to be imposed on those responsible for the conduct.
Directors must, in the performance of their duties, act in good faith in the interests of the issuer as a whole, act for proper purpose and apply such degree of skill, care and diligence as may reasonably be expected of persons of their knowledge and experience and holding their office within the issuer. This includes where directors grant share options to participants as incentives or rewards under a share option scheme. Failure to do so would be in breach of their duties to the issuer as required under GLR 5.01. Directors must also take immediate steps to procure that the issuer complies with the GLRs as soon as possible after any non-compliance is discovered.
For the avoidance of doubt, the Exchange confirms that the sanctions and directions in this news release apply only to the Company and the Relevant Directors (defined below), and not to any other past or present members of the board of directors of the Company.
The GEM Listing Committee of the Exchange (“GEM Listing Committee”) CENSURES:
L & A International Holdings Limited (“Company”) (Stock Code: 8195) for breaching GLRs 23.05, 23.06A, 17.27A, 17.27B, 17.56(2) and 6A.23(1) for (a) granting share options (“Options”) under its share option scheme (“Scheme”) during black-out period, (b) failing to timely announce the Options granted, (c) failing to timely disclose the shares issued upon the exercise of the Options by their grantees, (d) failing to ensure the information contained in its announcements and corporate communication was accurate and complete in all material respects and not misleading or deceptive, and (e) failing to timely consult and, if necessary, seek advice from its Compliance Adviser before publishing regulatory announcement;
CENSURES:
(1) Mr Ng Ka Ho (“Mr Ng”), chairman, executive director (“ED”) and Compliance Officer of the Company for (a) failing to use his best endeavours to procure the Company’s GLR compliance (“Best Endeavours Undertaking”), breaching his obligation under the Declaration and Undertaking with regard to Directors given to the Exchange in the form set out in Appendix 6A to the GLRs (“Director’s Undertaking”), (b) breaching his duties as director and Compliance Officer under GLRs 5.01(1), (2) and (6) and 5.20(1), and (c) failing to comply with the GLRs to his best ability, breaching his obligation under the Director’s Undertaking (“Best Ability Undertaking”);
FURTHER CENSURES:
(2) Mr Wong Chiu Po (“Mr Wong”), former non-executive director (“NED”) of the Company;
(3) Mr Ma Chi Ming (“Mr Ma”), independent non-executive director (“INED”) of the Company;
(4) Mr Chan Ming Sun Jonathan (“Mr Chan”), former INED of the Company; and
(5) Mr Kwong Lun Kei (“Mr Kwong”), former INED of the Company
for (a) failing to use their best endeavours to procure the Company’s GLR compliance, breaching their obligations under the Directors’ Undertakings, (b) breaching their duties as directors under GLR 5.01(1), (2) and (6), and (c) failing to comply with the GLRs to their best ability, breaching their obligations under the Director’s Undertaking.
(The directors identified at (2) to (5) above are collectively referred to as the “Relevant Directors”.)
On 2 October 2018, the GEM Listing Committee conducted a hearing into the conduct of the Company and the Relevant Directors in relation to their obligations under the GLRs and the Directors’ Undertakings.