SECURITIES AND FUTURES COMMISSION v. TONG SHEK LUN AND OTHERS

SECURITIES AND FUTURES COMMISSION v. TONG SHEK LUN AND OTHERS

On the agreed undisputed facts the court was satisfied the company’s affairs were conducted in a manner within s214(1)(a)-(d): Tong caused/permured reduction of the SPA consideration, diverted a US$1,000,000 consultancy opportunity to his company and caused material non-disclosure of the Consultancy Agreement making the transaction a connected/major transaction; Ko and Chung failed to exercise reasonable skill and care. The court made disqualification orders (Tong 7 years from 16 March 2018 to 9 August 2023; Ko and Chung 5 years from 16 March 2018 to 9 August 2021) and ordered the three respondents jointly and severally to pay US$495,000 compensation to the company plus US$395,241.37...

Citation
[2020] HKCFI 435
Parties
Petitioner: Securities and Futures Commission; 1st Respondent: Tong Shek Lun; 2nd Respondent: Ko Lai King Kinny; 3rd Respondent: Chung Wai Yu Regina; 4th Respondent: Sinogreen Energy International Group Limited (formerly Karce International Holdings Company Limited)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 April 2020
Case Number
HCMP2386/2014
Procedural Posture
SFO Section 214 Disqualification and Compensation Proceedings / Judgment (carecraft Summary Procedure)
Outcome
Disqualification and compensation orders made pursuant to s214 SFO by consent under Carecraft procedure
Legal Topics
Director Disqualification, Misfeasance and Defalcation, Connected Transactions and Disclosure, Diversion of Corporate Opportunity, Pre Judgment Interest, Carecraft Procedure
Source Language
EN
Company Law Securities Regulation Civil Remedies for Breach of Fiduciary Duty Director Disqualification Misfeasance and Defalcation Connected Transactions and Disclosure Diversion of Corporate Opportunity Pre Judgment Interest +1 more

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Parties

Securities and Futures Commission

Petitioner

Tong Shek Lun

1st Respondent

Ko Lai King Kinny

2nd Respondent

Chung Wai Yu Regina

3rd Respondent

Sinogreen Energy International Group Limited (formerly Karce International Holdings Company Limited)

4th Respondent

Procedural Posture

SFO Section 214 Disqualification and Compensation Proceedings / Judgment (carecraft Summary Procedure)

Legal Issues

  1. 1 Whether the respondents conducted the company’s affairs in a manner falling within s214(1)(a)-(d) SFO
  2. 2 Whether Tong diverted/misappropriated a US$1,000,000 consultancy fee and whether Ko and Chung failed in their duties
  3. 3 Whether the SPA/Consultancy Agreement and nondisclosure breached Listing Rules and justified disqualification

Ratio Decidendi

On the agreed undisputed facts the court was satisfied the company’s affairs were conducted in a manner within s214(1)(a)-(d): Tong caused/permured reduction of the SPA consideration, diverted a US$1,000,000 consultancy opportunity to his company and caused material non-disclosure of the Consultancy Agreement making the transaction a connected/major transaction; Ko and Chung failed to exercise reasonable skill and care. The court made disqualification orders (Tong 7 years from 16 March 2018 to 9 August 2023; Ko and Chung 5 years from 16 March 2018 to 9 August 2021) and ordered the three respondents jointly and severally to pay US$495,000 compensation to the company plus US$395,241.37...

Court Disposition

Disqualification and compensation orders made pursuant to s214 SFO by consent under Carecraft procedure

Orders

  • 1st Respondent Tong Shek Lun disqualified from acting as director, liquidator, receiver or manager of any listed or unlisted company and from participating in management of any such company (including 4th Respondent and its subsidiaries/affiliates) for seven years from 16 March 2018 to 9 August 2023, without leave...
  • 2nd Respondent Ko Lai King Kinny disqualified from acting as director, liquidator, receiver or manager of any listed or unlisted company and from participating in management of any such company (including 4th Respondent and its subsidiaries/affiliates) for five years from 16 March 2018 to 9 August 2021, without...