Date

Company / Name

Breach Conduct

Disciplinary Actions


27 March 2018
  • Mr Tang Yun (former executive director of Changhong Jiahua Holdings Limited (“Company”))
  • Mr Rong Dong (former executive director of the Company)
  • Mr Zhao Yong (executive director of the Company)
  • Mr Zhu Jianqiu (executive director of the Company)
  • Ms Shi Ping (executive director of the Company)
  • Mr Xiang Chaoyang (former executive director of the Company)
  • Mr Wu Xiangtao (former executive director of the Company)
  • Mr Yu Xiao (former executive director of the Company)
  • Mr Jonathan Chan Ming Sun (independent non-executive director of the Company)
  • Mr Robert Ip Chun Chung (independent non-executive director of the Company)
  • Mr Sun Dongfeng (independent non-executive director of the Company)
  • Mr Cheng Yuk Kin (independent non-executive director of the Company)

    (Collectively, “Relevant Directors”)

  • GLR5.01(6)
  • GLR5.20
  • Director’s Undertaking

    With the downsizing of the business of trading of consumer electronic products and components conducted by a subsidiary, there was a cut to the staff of the subsidiary from 2013 to 2015. This had the effect of impairing the internal controls resulting in an employee of the subsidiary being able to perpetrate a suspected misappropriation of assets of the subsidiary.

  • Relevant Directors breached GLR5.01(6) and their Directors' Undertakings by failing to ensure the internal controls of the subsidiary remained effective notwithstanding the downsizing in the numbers of staff.
  • Mr Tang Yun breached GLR5.20 by failing to comply with his duty as the Compliance Officer of the Company.
  • Mr Zhao Yong also breached GLR5.01(6) by reason of his persistent absence from Company board meetings and general meetings.

REGULATORY MESSAGE:


The Exchange views the due performance of directors’ duties seriously. It has, since 2014, been a theme of the Exchange’s enforcement activities.


Directors have clear duties to safeguard assets of the listed issuer and its subsidiaries. They must ensure that adequate internal controls are established and properly implemented. Failure to do so exposes listed issuers to risks including that of the misappropriation of assets. Setting up internal controls framework and documentation is only partial fulfillment of their duties. Directors need to take a proactive approach to ensure proper implementation of internal controls taking into account any major change (whether in the direction, scale, components or otherwise) in the business operations of the listed issuer and its subsidiaries. Consideration must also be given to the adequacy of resources devoted to the maintenance of internal controls.


Directors must take an active interest in the affairs of the listed issuer including actively participating in board meetings. Failure to do so falls short of the standard expected of directors of listed companies and amounts to a dereliction of their duties.


Compliance Officers have the important role towards ensuring adequate internal controls and their proper implementation. The role is not simply a rule requirement but requires pro-active engagement by properly qualified individuals.


SANCTIONS:


Public Censure of

  • Mr Zhao Yong
  • Mr Tang Yun
  • Mr Rong Dong

Public Criticism of

  • Mr Zhu Jianqiu
  • Ms Shi Ping
  • Mr Xiang Chaoyang
  • Mr Wu Xiangtao
  • Mr Yu Xiao
  • Mr Jonathan Chan Ming Sun
  • Mr Robert Ip Chun Chung
  • Mr Sun Dongfeng
  • Mr Cheng Yuk Kin

DIRECTION:

  • Those of the Relevant Directors who remain current directors of the Company are to procure the Company to appoint a Compliance Adviser as described in the press release
  • Directors’ training as described in the press release.

NEWS RELEASE:

http://www.hkex.com.hk/News/News-Release/2018/180327news?sc_lang=en