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The Stock Exchange of Hong Kong Limited (Exchange) has taken its first-ever disciplinary action against two former directors of a listed company for failing to cooperate in investigations conducted by both the Exchange and the Securities and Futures Commission (SFC) (Notes 1 & 2).
This action underscores the strategic collaboration between the Exchange and the SFC in enhancing the efficiency of investigations and enforcement processes and achieving fair regulatory outcomes by leveraging the Exchange’s disciplinary powers under the Listing Rules.
In its disciplinary action, the Exchange has publicly censured Ms Ma Xiaoqiu and Mr Jin Lailin, former executive director and independent non-executive director of TOMO Holdings Limited (TOMO) respectively. The Exchange stated that both Ms Ma and Mr Jin are unsuitable to occupy positions as directors or within senior management of TOMO or any of its subsidiaries.
Both the Exchange and the SFC investigated matters relating to TOMO.
The SFC conducted an investigation into possible contraventions under the Securities and Futures Ordinance (SFO) involving TOMO and/or persons connected with it. It issued notices under section 183 of the SFO to Ms Ma and Mr Jin requiring information and documents relevant to its investigation. However, neither Ms Ma nor Mr Jin responded to these notices. Consequently, the SFC referred the matter to the Exchange for appropriate action under the Listing Rules.
The Listing Division of the Exchange (Division) was also conducting an investigation into whether Ms Ma and Mr Jin had discharged their duties and obligations under the Listing Rules. Neither of them responded to the investigation.
Under the Listing Rules, every director of a listed issuer has an obligation to cooperate in any investigation conducted by the Division or the SFC. This obligation continues even after an individual ceases to be a director. Having considered the evidence, the Listing Committee found that both Ms Ma and Mr Jin had breached this requirement, and that the breach was serious.
HKEX Head of Listing Regulation and Enforcement, Catherine Yien, said: “The cooperation of issuers and directors with the Exchange and the SFC is essential to the maintenance of an orderly, informed and fair securities market. The Exchange is committed to maintaining the quality of our issuers and markets for the benefit of the investing public, and we have zero tolerance for non-cooperation. This is serious misconduct that will result in appropriate sanctions against the directors. Issuers and directors are reminded to fully cooperate with the Division and the SFC in their investigation and provide them with complete, accurate and up-to-date information in a timely manner.”
The SFC’s Executive Director of Enforcement, Christopher Wilson, said: “When directors fail to cooperate with regulatory investigations, they undermine the effectiveness of our oversight and compromise our ability to protect investors. This case underscores the serious consequences for directors who neglect these fundamental responsibilities. The strategic partnership between the SFC and the Exchange continues to deliver robust enforcement outcomes to ensure that those who seek to avoid accountability cannot simply walk away from their obligations. The SFC will continue to collaborate with the Exchange, utilising our combined resources and expertise to maintain the highest standards of market integrity and safeguard investor confidence in Hong Kong’s financial markets.”
The SFC’s investigation is still ongoing.
Notes:
- The Stock Exchange of Hong Kong Limited is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX).
- Under the Listing Rules, the Exchange may impose various sanctions on the parties involved in breaches of the Listing Rules, including reputational, remedial and ancillary or operational sanctions.
Ends
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