On 19 July 2021, the GEM Listing Committee of The Stock Exchange of Hong Kong Limited (the “HKEx”) censured two former directors of Farnova Group Holdings Limited (Stock Code: 8153) (the “Company”).
In 2019, two former directors of the Company, Mr. Qian Gang (“Mr. Qian”) and Mr. Wang De Qun (“Mr. Wang”), were notified by the Company of the blackout periods in respect of dealings in the securities of the Company. Despite being so advised, Mr. Qian and Mr. Wang dealt in the Company’s shares during the blackout periods without complying with the provisions of the GEM Listing Rules.
The Listing Division (“Division”) subsequently sent investigation letters and reminder letters to Mr. Qian and Mr. Wang with further enquiries about their dealings, however, despite being aware of the Division’s investigation, Mr. Qian and Mr. Wang did not respond in respect of their breaches.
A key takeaway that the HKEx reiterated in their regulatory announcement was that directors should strictly comply with the securities dealing requirements under the Listing Rules, especially during the periods immediately before the publication of the issuer’s financial results. The prohibitions are absolute and are of fundamental importance to promote investor confidence in the securities market.
Directors are also expected to comply with their Undertakings to cooperate with the HKEx, even when they have ceased to be a director of the relevant issuer. Failure to respond to the HKEx’s enquiries will be treated as a serious breach of the Listing Rules.
A copy of the Statement of Disciplinary Action is available on the HKEx website.
Companies wishing to minimize compliance risks such as the above should consider engaging a professional corporate governance advisor, such as Hauzen Services Limited.
Contact us today for advice on your obligations under the Listing Rules as a director or if you require assistance with HKEx enquiries or investigations.