On 14 April 2021, The Listing Committee of The Stock Exchange of Hong Kong Limited (the “HKEx”) censured (1) China Tangshang Holdings Limited (Stock Code: 674) (the “Company”); (2) Mr. Zhou Hou Jie (“Mr. Zhou”), executive director of the Company; criticized (3) Mr. Chen Wei Yu (“Mr. Chen”), executive director and Chairman of the Company; and directed (4) the Company to conduct an internal control review; and (5) Mr. Zhou and Mr. Chen to undergo training.
HKEx found that :
- the Company failed to comply with the announcement and/or shareholders’ approval requirements applicable to a major transaction and an advance to an entity, carried out by its subsidiary in September 2019, thereby breaching the Listing Rules; and
- Mr. Chen and Mr. Zhou failed to discharge their duties as directors, including their failure to implement effective internal controls for ensuring the Company’s compliance with the Listing Rules.
A key takeaway that the HKEx reiterated in their regulatory announcement was that listed company shareholders are entitled to information about, and if applicable to vote on, material transactions carried out by the listed issuer. To safeguard the interests of the investing public, listed issuers must comply with the procedural requirements set out in the Listing Rules.
Directors are ultimately responsible for the issuer’s compliance with the Listing Rules. Thus, it is imperative for directors to take active steps to ensure the listed issuer’s compliance, including implementing and maintaining adequate and effective internal controls.
A copy of the Statement of Disciplinary Action is available on the HKEx website.
HKEx confirmed that the sanctions and directions applied only to the Company, Mr. Zhou and Mr. Chen, and not to any other past or present members of the board of directors of the Company.
For assistance with the Listing Rules or HKEx enforcement matters, please contact us today.