Date Company/ Name Breach Conduct Disciplinary Actions
17 May 2019

• Weiqiao Textile Company Limited (“Company”)

• Ms Zhang Hong Xia (“Ms Zhang”), executive director (“ED”) and Chairman of the Company

• Ms Zhao Su Wen (“Ms Zhao”), ED and Chief Financial Officer of the Company

• Mr Zhang Jing Lei (“Mr Zhang”), ED and Company Secretary of the Company

(collectively, “Relevant Directors”)
          




• MLRs 13.46(2)(a), 13.49(1), 13.49(3)(i)(c), 14.34, 14A.35, 14A.36, 14A.46, 14A.49, 14A.55 and 14A.56

• MLR3.08(d)

• MLR3.08(f)

• Director’s Undertaking




                       
• The Company failed to comply with the disclosure and shareholders’ approval requirements for certain connected transactions and for a delay in financial reporting.

• The Relevant Directors breached (i) Rule 3.08(d) (Ms Zhang and Ms Zhao only), (ii) Rule 3.08(f) and (iii) their respective Undertakings for failing to comply with the Exchange Listing Rules to the best of their ability and to use their best endeavours to procure the Company’s compliance with the Exchange Listing Rules.

REGULATORY MESSAGE:           

This case is a reminder of the role that directors must play to ensure a listed issuer’s compliance with the Listing Rules.

The Company’s admitted breaches of the Listing Rules were caused by a failure to correctly identify certain connected transactions. Although the responsibility for Listing Rule compliance had been delegated to senior management, the Relevant Directors failed to provide adequate supervision of or raise enquiries with senior management, and did not exercise their own independent judgment in respect of those transactions. Ultimately, the responsibility for a listed issuer’s Listing Rule compliance lies with the directors.

The Company’s breaches of the connected transactions provisions deprived the Company’s investors and shareholders of timely receipt of information in relation to the connected transactions, and for the independent shareholders, their right to vote on those transactions. Compliance with the connected transactions requirements under the Listing Rules is an important element of the responsibilities of a listed issuer and its directors.
                    
SANCTIONS:


Public Censures of

• Weiqiao Textile Company Limited

• Ms Zhang Hong Xia

• Ms Zhao Su Wen

• Mr Zhang Jing Lei

 

DIRECTIONS:

 

• The Company to appoint an independent compliance adviser for two years

• Directors’ training
 

as described in the news release.

 

NEWS RELEASE:

https://www.hkex.com.hk/News/News-Release/2019/190517news?sc_lang=en