On 4 January 2022 the Stock Exchange of Hong Kong Limited (“Exchange“) issued a Statement of Disciplinary Action against China Properties Investment Holdings Limited (the “Company“) and five of its current and former directors (the “Directors“).
The Company’s wholly owned subsidiary made two disposals of listed shares on the Company’s behalf in 2019 (the “Two Disposals“). Each of the Two Disposals constituted a disclosable transaction, but the Company failed to announce the Two Disposals within the required time. Thus, the Listing Committee found that the Company had breached Listing Rule 14.34. This was, in fact, a repeated breach – in 2018, the Company had already been warned by the Exchange after a similar incident. The Listing Committee also found that the Directors had failed to discharge their duties to ensure that the Company had adequate and effective internal controls for the purpose of complying with the notifiable transaction requirements. As a result, the Exchange directed the Company to conduct an internal control review for procuring compliance with Chapter 14 of the Listing Rules and each of the Directors to undergo training on regulatory and legal topics and Listing Rule compliance.
The Exchange is more likely to take disciplinary actions and impose public sanctions on those responsible where the breach is a repeated one after a warning or guidance has been given by the Exchange, as in this case. To avoid disciplinary actions of this nature, directors should provide timely responses when breaches or deficiencies have been discovered.