SECURITIES AND FUTURES COMMISSION v. FUNG CHIU AND OTHERS

SECURITIES AND FUTURES COMMISSION v. FUNG CHIU AND OTHERS

The SFC proved that the 1st and 3rd respondents were responsible, collectively or individually, for the Company’s affairs being conducted with misfeasance and other misconduct: they allowed a shadow controller to control finances, approved or signed misleading announcements and back‑dated minutes, failed to exercise required skill and care, and permitted significant unsecured transfers to related parties; accordingly disqualification orders (7 years for 1st respondent, 6 years for 3rd respondent) covering all corporations were justified to protect the public and deter misconduct.

Citation
SECURITIES AND FUTURES COMMISSION v. FUNG CHIU AND OTHERS
Parties
Petitioner: Securities and Futures Commission; Subject Company: GP NanoTechnology Group Limited (in liquidation); Respondent: 1st respondent; Respondent: 2nd respondent; Respondent: 3rd respondent; Respondent: 4th respondent (deceased); 5th Respondent: Wu Wing Yan
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
13 October 2009
Case Number
HCMP2524/2006
Procedural Posture
Disqualification Petition Under Section 214 Securities and Futures Ordinance (cap.571) / Judgment Following Hearing on Petition (final Hearing)
Outcome
Amended petition proved against 1st and 3rd respondents; disqualification orders made
Legal Topics
Director Disqualification, Misfeasance, Misrepresentation in Announcements, Breach of Listing Rules, Duty of Care and Diligence
Source Language
EN
Securities Law Company Law Corporate Governance Insolvency Law Director Disqualification Misfeasance Misrepresentation in Announcements Breach of Listing Rules +1 more

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Parties

Securities and Futures Commission

Petitioner

GP NanoTechnology Group Limited (in liquidation)

Subject Company

1st respondent

Respondent

2nd respondent

Respondent

3rd respondent

Respondent

4th respondent (deceased)

Respondent

Wu Wing Yan

5th Respondent

Procedural Posture

Disqualification Petition Under Section 214 Securities and Futures Ordinance (cap.571) / Judgment Following Hearing on Petition (final Hearing)

Legal Issues

  1. 1 Whether conduct of company/officers fell within s.214(1)(b)-(d) SFO (misfeasance, other misconduct, unfairly prejudicial conduct)
  2. 2 Whether affairs of principal subsidiary (Guang Ping) could be treated as affairs of listed holding company for s.214 purposes
  3. 3 Whether 1st and 3rd respondents abdicated duties and failed to exercise reasonable skill, care and diligence

Ratio Decidendi

The SFC proved that the 1st and 3rd respondents were responsible, collectively or individually, for the Company’s affairs being conducted with misfeasance and other misconduct: they allowed a shadow controller to control finances, approved or signed misleading announcements and back‑dated minutes, failed to exercise required skill and care, and permitted significant unsecured transfers to related parties; accordingly disqualification orders (7 years for 1st respondent, 6 years for 3rd respondent) covering all corporations were justified to protect the public and deter misconduct.

Court Disposition

Amended petition proved against 1st and 3rd respondents; disqualification orders made

Orders

  • 1st respondent disqualified for seven years from being or continuing to be a director, liquidator, receiver or manager of any corporation or from being concerned or taking part in management of any corporation without leave of the court (order effective from 27 October 2009)
  • 3rd respondent disqualified for six years from being or continuing to be a director, liquidator, receiver or manager of any corporation or from being concerned or taking part in management of any corporation without leave of the court (order effective from 27 October 2009)