The Securities and Futures Commission v. Combest Holdings Ltd and Others

HCCW 118/2020

[2025] HKCFI 2237

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 118 OF 2020

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REASONS FOR DECISION

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Introduction

1.By a Re-Amended Petition dated 11 May 2022 (“Petition”), the Securities and Futures Commission (“SFC”) seeks:

(1)  An order to wind up the 1^st Respondent (“Combest”) pursuant to section 212 of the Securities and Futures Ordinance (Cap. 571) (“SFO”);

(2)  Disqualification orders against the 2^nd Respondent (“Dino Ng”), the 3^rd Respondent (“Leo Liu”), and the 4^th Respondent (“Spencer Lee”) (collectively “the Respondent Directors”), pursuant to sections 214(2)(a) and/or (d) of the SFO;

(3)  Further or in the alternative to (1) above, a compensation order against the Respondent Directors pursuant to section 214(2)(e) of the SFO; and

(4)  Further or in the alternative to (1) and/or (3) above, an order that Combest and/or its subsidiaries institute proceedings against the Respondent Directors pursuant to sections 214(2)(b) and/or (e) of the SFO.

2.The SFC and all the Respondents have reached an agreement to dispose of the proceedings by way of the Carecraft procedure.  The Carecraft schedule (“Schedule”) contains a summary of the undisputed facts, the Commission’s case against the Respondents, and the agreed proposed orders. I have appended the Schedule to these Reasons for Decision.

Factual Background

3.The material facts are set out in full in the Schedule. It is only necessary for the Court to give an overview here.

Combest

4.Combest was and is a company incorporated in the Cayman Islands on 28 August 2001.  Between 8 February 2002 and 24 December 2020, the shares of Combest were listed on the Growth Enterprise Market (“the GEM”) of The Stock Exchange of Hong Kong Limited (“the SEHK”).[1]

5.Combest was an investment holding company and all its business activities were undertaken by its subsidiaries[2].  I will refer to Combest and its subsidiaries collectively as the “Group”.

6.In January 2016, the controlling shareholder of Combest Wang Linjia (“Wang”) owned approximately 22.85% of Combest’s shares through Dream Star International Limited (“Dream Star”), and Combest carried on business manufacturing healthcare products and OEM consumer electronic products (“Old Business”)[3].

7.Between September 2016 and January 2017, the relevant Combest share certificates (issued in the name of Dream Star) were given to Dino Ng’s brother, Ng Kwok Wai (“Gabriel Ng”), and Combest disposed of the subsidiary that held and operated the Old Business[4] to Dream Star[5].

Respondent Directors

8.Dino Ng was a shadow director of Combest since 2016.  In particular:

(1)  Leo Liu and Spencer Lee were accustomed to and did follow his directions and instructions with respect to the Group’s affairs; and

(2)  Dino Ng was allowed to and did direct the operations of the new businesses of the Group, as particularised below[6].

9.Leo Liu and Spencer Lee, who were the only de jure executive directors (“ED”) of Combest between 2016 and the commencement of these proceedings, held the following positions at Combest[7]:

Name	Position	Term
Leo Liu	Independent non-executive director (“INED”)	14 July 2016 to 22 November 2016
	Chairman and ED	22 November 2016 to 22 May 2020
	Non-executive director (“NED”)	22 May 2020 to 10 August 2020
Spencer Lee	ED	18 February 2009 to 22 May 2020
	NED	22 May 2020 to 10 August 2020
	Financial controller	1 July 2008 to 22 May 2020
	Company secretary	1 July 2008 to 10 August 2020

1^st Area of Complaint – The GG Acquisition

10.On 6 January 2016, a wholly-owned subsidiary of Combest acquired (“the GG Acquisition”) Giant Goal Limited and its subsidiaries (collectively “the GG Group”) for a consideration of HK$70 million (“the GG Consideration”) [8]. The GG Group’s business comprised money lending and advisory services[9].

11.The GG Acquisition was procured by Dino Ng, with the assistance of Spencer Lee, who inter alia approved the GG Acquisition at Combest’s board meeting and executed the sale and purchase agreement on behalf of Combest’s subsidiary[10].

12.Preceding the GG Acquisition, on 4 January 2016, Combest published an announcement (“the 2016 Announcement”)—which was procured by Dino Ng and approved by Spencer Lee—representing that the GG Acquisition was a bona fide arm’s length commercial transaction that was executed in the interests of Combest[11].

13.In fact, the GG Acquisition bore the following features:

(1)  The vendor of the GG Group—whose sole shareholder was a delivery driver—had acquired the GG Group from Dino Ng for only HK$110,000 on 1 April 2015 (i.e. just 8 months before the GG Acquisition)[12].

(2)  Even though the vendor of the GG Group was ostensibly held by a third party, at all material times and even after the GG Acquisition, Dino Ng continued to maintain control over, and direct the operations of, the GG Group[13].

(3)  The GG Group’s revenue for the 2015/2016 financial year in which it was acquired was substantially generated by entities related to Dino Ng.  Subsequently, in the 2017/2018 financial year, the revenue went into free-fall without any identifiable business reason[14].

(4)  The GG Consideration was over-priced by HK$61,474,863[15].

(5)  The GG Consideration was paid to Elegant Mark Investment Limited (“Elegant Mark”), a company that was controlled by Dino Ng and whose bank account signatory was Gabriel Ng[16].

14.In the premises, the GG Acquisition was not a bona fide commercial transaction between independent parties.  Further, (1) Dino Ng procured the GG Consideration to be siphoned off from Combest to enrich himself; and (2) the newly acquired GG Group provided Combest with the appearance of a substantial level of operations and assets, so that Combest could satisfy rule 17.26 (“Rule 17.26”) of the Rules Governing the Listing of the Securities on the GEM (“the GEM Listing Rules”)[17] even without the Old Business[18].

15.In causing Combest to enter into the GG Acquisition with knowledge of the foregoing matters, Dino Ng and Spencer Lee breached their fiduciary duties to Combest[19].

16.Moreover, none of the foregoing matters were disclosed to the public, and the 2016 Announcement was published instead[20].

2^nd Area of Complaint – Fictitious and Artificial Businesses of the GG Group After the GG Acquisition

17.Since its acquisition by Combest, the GG Group’s businesses—which were conducted by, inter alios, Spencer Lee and Leo Liu under the ultimate directions of Dino Ng—were entirely fictitious or artificial[21]:

(1)  The customers of the GG Group’s money lending business were related to Dino Ng and/or procured by him.  The loans were not bona fide commercial transactions at arm’s length[22].

(2)  The customers of the GG Group’s advisory business were also related to Dino Ng and/or procured by him.  No real advice was given and the scope of work and advisory fees were artificially determined by Dino Ng[23].

18.Nevertheless, the GG Group’s businesses were represented to be bona fide profitable businesses in Combest’s publicly disclosed financial statements[24].

19.In the premises, Dino Ng breached his fiduciary duties to Combest.  Spencer Lee and Leo Liu also breached their fiduciary duties in knowingly allowing the operations of the GG Group to be directed by Dino Ng and failing to supervise such operations at all[25].

3^rd Area of Complaint – The TAR Acquisition

20.On or around 1 April 2017, Combest acquired (“the TAR Acquisition”) 51% of the shares of Ultra Rich Global Limited (“Ultra Rich”) and its subsidiaries (collectively “the TAR Group”) for a consideration of HK$170 million, with a profit guarantee from the vendor that the pre-tax profit of the TAR Group for the calendar year 2017 would be at least HK$30 million (“Profit Guarantee”) [26].

21.The TAR Group comprised TAR Fund Management (Cayman) Limited (“TAR FM”), which was wholly owned by Fine One Global Limited (“Fine One”), which in turn was wholly owned by Ultra Rich[27].  Its business was management of investment funds[28].

22.The TAR Acquisition was procured by Dino Ng, with the assistance of Spencer Lee and Leo Liu.  Both Spencer Lee and Leo Liu approved the TAR Acquisition at Combest’s board meeting, and Spencer Lee executed the sale and purchase agreement[29].

23.On 1 April 2017, Combest published an announcement (“the 2017 Announcement”)—which was arranged by Dino Ng and approved by Leo Liu and Spencer Lee—representing that the TAR Acquisition was an arm’s length commercial transaction that was in the interests of Combest[30].

24.In fact, the TAR Acquisition bore the following features:

(1)  Dino Ng was behind the formation of the TAR Group and its business.

(a)  In around September 2016, Dino Ng procured Fine One to acquire TAR FM from a third party.  The purchase price of HK$3 million came from Elegant Mark.  Effectively, TAR FM was acquired as a shell[31].

(b)  In November 2016, Dino Ng caused Ultra Rich to acquire Fine One at an artificial value of HK$110 million, even though TAR FM had no or minimal operations[32].

(c)  Between December 2016 and April 2017, Dino Ng caused various companies to subscribe to new investment funds (“the Purported Funds”) set up by TAR FM to create the appearance of substantial operation and assets under management.  The transfers of the funds for the subscriptions were part of circular fund flows involving companies controlled by, associated with or related to Dino Ng[33].

(2)  Subsequent to the TAR Acquisition, Dino Ng continued to direct the operations of the TAR Group, and caused further circular fund flows involving companies controlled by, associated with or related to him, thereby creating the appearance of significant volume of fund subscription and also fund lending[34].

(3)  The true value of the 51% shareholding in the TAR Group acquired by Combest was no more than HK$2.2 million. The TAR Acquisition was over-priced by HK$167,783,254[35].

(4)  The Profit Guarantee was arbitrarily fixed in that it far exceeded the TAR Group’s profits prior to the TAR Acquisition[36].

(5)  The TAR Consideration was paid to a company owned by Dino Ng[37].

25.In the premises, Dino Ng procured the TAR Acquisition to siphon off the TAR Consideration from Combest to enrich himself and to create the appearance of Combest having a substantial level of operations and assets, so that Combest could satisfy Rule 17.26 even without the GG Group[38].

26.In causing Combest to enter into the TAR Acquisition with knowledge of the foregoing matters, Dino Ng, Spencer Lee and Leo Liu breached their fiduciary duties to Combest[39].

27.Moreover, none of the foregoing matters were disclosed to the public and the 2017 Announcement was published instead[40].

4^th Area of Complaint – Fictitious and Artificial Business of the TAR Group After the TAR Acquisition

28.Since the TAR Acquisition, certain businesses of the TAR Group were fictitious or artificial:

(1)  The TAR Group earned management fees from managing the Purported Funds[41].

(2)  95% of the subscriptions to the Purported Funds before and after the TAR Acquisition, totalling HK$2.686 billion, were (a) sourced from entities related to Dino Ng and/or (b) procured by him[42]. Moreover, a large portion of the subscriptions were returned either to their source or other entities controlled by, associated with or related to Dino Ng. Out of such returns of funds, approximately HK$990.4 million was ultimately transferred back to Dino Ng and his nominee entities[43].

(3)  Dino Ng also procured the Purported Funds to make loans totaling HK$1.6 million to his nominee entities[44].

29.The purpose and effect of the foregoing was to artificially inflate the assets under management of TAR FM and its revenue, such that (1) Combest could disclose in its financial statements that the TAR Group’s business was bona fide and profitable; and (2) the HK$30 million Profit Guarantee was satisfied[45].

30.Dino Ng’s above control of the operations of TAR Group for improper purposes constituted a breach of his fiduciary duties.  Further, Spencer Lee and Leo Liu also breached their fiduciary duties by knowingly facilitating Dino Ng’s control of the TAR Group and failing to supervise the TAR Group at all[46].

Losses Suffered by the Group

31.The Group paid more to acquire the GG and TAR Groups than they were worth, thereby suffering loss and damage in the amounts of HK$61,474,863 and HK$167,783,254 respectively[47].

32.Dino Ng also procured the Group to borrow money from, and pay interest to, various entities controlled by, associated with or related to him (“Combest Loans”)[48]. These loans were artificial and had no commercial purpose—inter alia, seven out of eight of the Combest Loans were part of the circular fund flows whereby money was inter alia transferred into and out of the Purported Funds[49].  Accordingly, they were unnecessary and contrary to the Group’s interests.  The Group therefore suffered loss and damage in the amount of the interest paid on the loans, which totalled HK$31,901,809.  The Combest Loans were procured with the knowing acquiescence of Spencer Lee and Leo Liu[50].

33.For one of the Combest Loans, Combest also paid an artificial and unnecessary introducer’s fee of HK$32,300,000 to a company controlled by, associated with or related to Dino Ng[51].

34.In the premises, as a result of Dino Ng’s, Spencer Lee’s and Leo Liu’s breaches of fiduciary duties, the Group suffered a total loss of HK$293,459,926[52].

False and Misleading Disclosure and Breaches of the GEM Listing Rules

35.Combest made the following false and misleading disclosures:

(1)  The disclosure in the 2016 Announcement that the GG Acquisition was a bona fide arm’s length commercial transaction in Combest’s interests[53] was false and misleading by reason of the matters summarised in [10] to [16] above[54].

(2)  The disclosure in the 2017 Announcement that the TAR Acquisition was an arm’s length commercial transaction in Combest’s interests[55] was false and misleading by reason of the matters summarised in [20] to [27] above[56].

(3)  Combest’s 2017 to 2019 financial statements were false and misleading in that, by reason of the matters summarised in [17] to [30] above, the disclosed revenue and profit generated therefrom was not derived from bona fide commercial activities[57].

(4)  Furthermore, by reason of the matters summarised in [8] to [34] above, Combest’s 2016 to 2018 annual reports misleading disclosed that[58]:

(a)  The business of the GG and TAR Groups were bona fide, profitable commercial businesses; and

(b)  Combest’s EDs (viz Leo Liu and Spencer Lee) were properly supervising Combest’s businesses; exercising their own independent judgment when operating the businesses of Combest instead of following the instructions of an undisclosed third party (viz. Dino Ng); and were operating the businesses of Combest in the interests of Combest instead of the interests, or to further the private purposes, of Dino Ng.

36.The foregoing false and misleading disclosures constituted a breach of rule 17.56 of the GEM Listing Rules (“Rule 17.56”) [59], which provides that disclosed information must be accurate and complete in all material respects and not be misleading or deceptive.

37.In further breach of the GEM Listing Rules:

(1)  Contrary to Rule 17.26, by reason of the acquisition and operation of the businesses of the GG and TAR Groups, Combest was able to retain its listing status and its shares were not suspended, even though it had no substantial genuine operations[60].

(2)  Combest’s affairs were conducted in a way that was fundamentally inconsistent with the spirit and purpose of the GEM Listing Rules[61] and hence an abuse of its listing status[62].

Application of Section 214(1) of the SFO

38.By reason of the matters summarised above, the business and affairs of Combest have been conducted in a manner described in sections 214(1)(a) to (d) of the SFO[63].

Misconduct of the Respondent Directors

39.Dino Ng, as a shadow director of Combest since 2016, was wholly responsible for the business and affairs of Combest having been conducted in a manner described in sections 214(1)(a) to (d) of the SFO[64].  In particular, in breach of his fiduciary duties, Dino Ng procured:

(1)  Combest to enter into the GG and TAR Acquisitions and the fictitious, artificial and exaggerated revenue and business operations of the GG and TAR Groups, at the expense of and to the detriment of Combest and its subsidiaries for his own private purposes[65];

(2)  The defalcation of the Group’s property through the payments of the GG and TAR Considerations, interest on the Combest Loans and the introducer’s fee, to his nominee entities or entities controlled by, associated with or related to him, causing the Group to suffer a total loss of HK$293,459,926[66]; and

(3)  Combest to make false and misleading disclosures as particularised in [35] to [37] above[67].

40.Leo Liu, as an INED of Combest from 14 July 2016 to 22 November 2016 and then ED and Chairman from 22 November 2016 to 22 May 2020, was responsible for the business and affairs of Combest having been conducted in a manner described in sections 214(1)(a) to (d) of the SFO[68].  In particular, in breach of his fiduciary duties, Leo Liu:

(1)  Approved the TAR Acquisition at the relevant board meeting[69];

(2)  Failed to supervise the operations of the GG and TAR Groups, acted upon Dino Ng’s directions and knowingly facilitated the operations of the GG and TAR Groups to be directed and controlled by Dino Ng, whilst also knowing that Dino Ng’s directions and exercise of control were for Dino Ng’s private purposes and not in the interests of Combest[70];

(3)  Assisted Dino Ng by procuring a subsidiary of Combest (of which Leo Liu was a director) to subscribe to the Purported Funds (“the $142M Subscriptions”), using money that was originally borrowed under one of the Combest Loans.  Such subscriptions had no commercial purpose and were part of one of the artificial circular fund flows[71];

(4)  Knowingly assisted Dino Ng’s defalcation of the Group’s property, which caused the Group to suffer a loss totalling HK$292,267,967, by (a) approving the TAR Acquisition and (b) knowingly acquiescing in the payments of the GG and TAR Considerations, interest on the Combest Loans and the introducer’s fee[72]; and

(5)  Approving the contents of Combest’s 2016 to 2018 annual reports, the 2017 Announcement and Combest’s 2017 and 2018 financial statements, despite knowing that their contents were false and misleading as particularised in [35] to [37] above, causing Combest to be in breach of Rule 17.56[73].

41.Spencer Lee, as an ED of Combest from 18 February 2009 to 22 May 2020, was responsible for the business and affairs of Combest having been conducted in a manner described in sections 214(1)(a) to (d) of the SFO[74].  In particular, in breach of his fiduciary duties, Spencer Lee:

(1)  Arranged the GG Acquisition on the directions of Dino Ng, approved the GG and TAR Acquisitions at the relevant board meetings and executed the relevant sale and purchase agreements[75];

(2)  Failed to supervise the operations of the GG and TAR Groups, acted upon Dino Ng’s directions and knowingly allowed the operations of the GG and TAR Groups to be directed and controlled by Dino Ng, whilst also knowing that Dino Ng’s directions and exercise of control were for Dino Ng’s private purposes and not in the interests of Combest[76];

(3)  Witnessed the agreements for the $142M Subscriptions[77] and failed to stop Leo Liu from executing them[78];

(4)  Knowingly assisted Dino Ng’s defalcation of the Group’s property by approving the GG and TAR Acquisitions and as set out in [39(2)] above, which caused the Group to suffer a loss totalling HK$293,459,926[79]; and

(5)  Approving the contents of Combest’s 2016 to 2018 annual reports, the 2016 and 2017 Announcements and Combest’s 2017 and 2018 financial statements, despite knowing that their contents were false and misleading as particularised in [35] to [37] above, causing Combest to be in breach of Rule 17.56[80].

Applicable Principles

42.Three conditions must be satisfied for relief under section 214(1) of the SFO, namely (1) the corporation in question is or was a listed corporation, (2) the business or affairs complained of is that of the corporation, and (3) the conduct complained of falls within one or more heads of misconduct specified in sections 214(1)(a) to (d) of the SFO: SFC v Fung Chiu & Ors[81], [18].

43.Regarding the first condition, “listed” means “listed on a recognized stock market”.  A corporation “shall be regarded as listed if any of its securities are listed”: section 1, Part 1 of Schedule 1 to the SFO.

44.As regards the second condition, the conduct complained of can be that of the listed company and the subsidiaries directed by or under the control of such listed company, and the Court will take a realistic approach in determining whether the affairs of the subsidiary are the affairs of the holding corporation.  In cases where the principal business and activities of the group are undertaken by the subsidiary in question and the listed company is essentially an investment holding vehicle, it is legitimate for the court to take a broad and overall view of the situation and to regard the affairs of the subsidiary as the affairs of the holding corporation: SFC v Fung Chiu[82], [19] to [20].

45.As regards the third condition, although sections 214(1)(a) to (d) are all cited in [48] of the Schedule, it suffices for the SFC to rely on sections 214(1)(b) to (d).

46.The principles relating to the manners described in sections 214(b)-(d) of the SFO have recently been summarised by Ng J in SFC v Li Wing Sang & Ors[83] from [41] to [43]:

“41. In respect of s 214(1)(b):

(a) ‘Defalcation’ is defined as ‘misapplication, including misappropriation, of any property’. Misapplication means the disposition of the company’s property which the company or the board is forbidden, incompetent or unauthorized to make, or which is carried out by the directors in breach of their duties in good faith to promote the success of the company and for proper purposes: Re First Natural Foods Holdings Limited unrep, HCMP 205 of 2013, 17 February 2017, DHCJ Hunsworth;

(b) ‘Misfeasance’ is defined as ‘the performance of an otherwise lawful act in a wrongful manner’. The notion of misfeasance overlaps with that of breach of fiduciary duty and seemingly covers a wide range of conduct. In particular, it covers a director’s breach of his duties to exercise reasonable care and diligence in his management of the company, and to act in good faith in the best interests of the company: SFC v Zheng Dunmu[2024] 2 HKLRD 688 at [20(2)] per Linda Chan J;

(c) The words ‘other misconduct’ connote improper or wrong behaviour or mismanagement, or culpable neglect of duties. This term is something of a ‘belt and braces exercise’, and is intended to cover the ‘widest range of possible misconduct’ including a director’s breach of the duty to exercise reasonable skill care and diligence in the management of a company: SFC v Zheng Dunmu at [20(3) - 21] per Linda Chan J;

42. As for s 214(1)(c) ie members not having been given all the information with respect to its business or affairs that they might reasonably expect, it can be complementary to the other subsections and covers situations such as (1) the making of misleading or false announcements; and (2) situations requiring publication of periodic financial statements and announcements, as members are entitled to expect the listed company to provide complete and accurate information in respect of such matters: SFC v Zheng Dunmu at [22]

43. With respect to s 214(1)(d), the following observations were made in SFC v Zheng Dunmu at [23].

(a) The conduct in question does not have to be wrong per se.

(b) ‘Unfairly prejudicial’ conduct covers a range of conduct, from fraud at the one end to neglect or inaction on the part of those to whom the affairs of a company are entrusted on the other end. The question to be asked in such circumstances is whether the conduct concerned is that which can be expected from the managers of the company to whom those affairs have been entrusted.

(c) It covers the case where the listed company has (a) failed to comply with the disclosure requirements (SFC v Kwok Wing, HCMP 3392/2013, 9 October 2014, at [12]), (b) made misleading or false announcements, and (c) failed to publish periodic financial statements and announcements, as members are entitled to expect the listed company to provide complete and accurate information in respect of such matters: SFC v Sound Global Ltd [2022] HKCFI 3025, at [96].”

47.Under the Carecraft procedure, the Court must be independently satisfied, based on the agreed facts, that the business or affairs of the company have been conducted in a manner that falls within one of the limbs in section 214(1) of the SFO and, if so satisfied, determine the order to be made.  The Court is not bound by the agreement reached by the parties, but in practice, the Court is likely to be guided by the agreement that the SFC has reached: SFC v Tse On Kin [84], [5].

Application of Section 214 of the SFO

48.In the present case, I am satisfied that the three conditions are met necessary to invoke section 214(1) of the SFO.

49.The first condition is satisfied as Combest’s shares were listed on the GEM between 8 February 2002 and 24 December 2020[85].

50.The second condition is satisfied because the matters complained of by the SFC and summarised in [3] to [41] above concern the affairs of Combest and its subsidiaries directed by or under Combest’s control.  Combest was an investment holding company and all of its business activities at the material time were undertaken by the GG and TAR Groups[86].

51.As regards the third condition, I agree with the SFC that the following conduct complained of falls within sections 214(1)(b)-(d) of the SFO:

(1)  The 1^st area of complaint regarding the GG Acquisition, false and misleading 2016 Announcement and the loss caused thereby of HK$61,474,863, involving breaches of fiduciary duty by Dino Ng, Spencer Lee and Leo Liu, constituted:

(a)  The defalcation of the Group’s property by Dino Ng and misfeasance by Dino Ng, Leo Liu and Spencer Lee, falling within sections 214(1)(b) and (d) of the SFO; and

(b)  The non-disclosure of information to Combest’s shareholders, falling within section 214(1)(c) of the SFO.

(2)  The 2^nd area of complaint regarding the fictitious and artificial operations of the GG Group, involving breaches of fiduciary duty by Dino Ng, Spencer Lee and Leo Liu, which resulted in the misleading disclosure of the nature of Combest’s businesses and enabled Combest to remain listed in breach of the GEM Listing Rules, constituted:

(a)  Misfeasance by Dino Ng, Leo Liu and Spencer Lee within the meaning of sections 214(1)(b) and (d) of the SFO; and

(b)  The non-disclosure of information to Combest’s shareholders, falling within section 214(1)(c) of the SFO.

(3)  The 3^rd area of complaint regarding the TAR Acquisition, false and misleading 2017 Announcement and the loss caused thereby of HK$167,783,254, involving breaches of fiduciary duty by Dino Ng, Spencer Lee and Leo Liu, constituted:

(a)  The defalcation of the Group’s property by Dino Ng and misfeasance by Dino Ng, Leo Liu and Spencer Lee, falling within sections 214(1)(b) and (d) of the SFO; and

(b)  The non-disclosure of information to Combest’s shareholders, falling within section 214(1)(c) of the SFO.

(4)  The 4^th area of complaint regarding the fictitious and artificial operations of the TAR Group (not including the losses resulting from interest paid on the Combest Loans), involving breaches of fiduciary duty by Dino Ng, Spencer Lee and Leo Liu, which resulted in the misleading disclosure of the nature of Combest’s businesses and enabled Combest to remain listed in breach of the GEM Listing Rules, constituted:

(a)  Misfeasance by Dino Ng, Leo Liu and Spencer Lee, falling within sections 214(1)(b) and (d) of the SFO; and

(b)  The non-disclosure of information to Combest’s shareholders, falling within section 214(1)(c) of the SFO.

(5)  The losses resulting from the interest paid on the Combest Loans totalling HK$31,901,809 and the unnecessary introducer’s fee of HK$32,300,000, involving breaches of fiduciary duty by Dino Ng, Spencer Lee and Leo Liu constituted the defalcation of the Group’s property by Dino Ng and misfeasance by Dino Ng, Leo Liu and Spencer Lee, falling within sections 214(1)(b) and (d) of the SFO; and

(6)  The additional false and misleading disclosure in Combest’s 2016 to 2018 annual reports and 2017 to 2019 financial statements regarding Combest’s revenue and profit and the conduct of Combest’s EDs, involving breaches of fiduciary duty by Dino Ng, Spencer Lee and Leo Liu constituted the non-disclosure of information to Combest’s shareholders in breach of the GEM Listing Rules, falling within section 214(1)(c) of the SFO.

Compensation Order

52.Section 214(2)(e) of the SFO confers a very broad jurisdiction on the Court and was clearly intended to provide the Court with the widest powers to do justice: SFC v Tse On Kin[87] at [33].

53.Under section 214(2)(e), the Court has the power to:

(1)  Make an order for payment of compensation: SFC v Tse On Kin[88], [33];

(2)  Order payment of compensation directly to an assignee of an insolvent company’s claims, which was controlled by the company’s scheme administrators and would hold any recoveries for the benefit of the company’s creditors: SFC v Yeung Chung Lung & Ors[89], [67] and [109]; and

(3)  Order payment of an agreed amount of compensation in full and final settlement of the SFC’s monetary claim: SFC v Chin Jong Hwa & Ors[90], [23] and [33].

54.In the present case, the parties, including Combest, have agreed, inter alia, the following:

(1)  Dino Ng shall pay the sum of HK$192,443,683 (“the Proposed Sum”) as compensation in full and final settlement of the SFC’s claims under sections 214(2)(b) and (e) of the SFO and a sum of HK$440,000 being the Administrator’s fees (defined below) (i.e. a total of HK$192,883,683) directly to the account of an independent professional administrator[91] (“the Administrator”) to be jointly appointed by the SFC and Combest[92].

(2)  As set out in the Tomlin schedule, the Administrator shall distribute the Proposed Sum as special dividends to Combest’s shareholders.  Pending the satisfaction of the Tomlin schedule, the proceedings shall be stayed.  In particular, the undertakings given by Dino Ng to freeze assets under his control totaling HK$293,904,542.39 as set out in the Court’s order dated 15 February 2022 (dismissing the SFC’s application to appoint provisional liquidators) at [2] and [4] would stay in place.

(3)  Furthermore, Dream Star (the vehicle holding a ~22% shareholding of Combest) and Gabriel Ng (holding 1.56% shareholding of Combest) have given undertakings to the SFC to (a) return the special dividends they receive back to the Administrator, and (b) instruct the Administrator to distribute the returned monies to the other shareholders.  The rationale for this is to prevent any part of the Proposed Sum from being paid to a company or an individual which the SFC alleges is controlled by, associated with, or related to Dino Ng.

55.The Proposed Sum of HK$192,443,683 is less than the total loss and damage suffered by the Group of HK$293,459,926 as agreed for the purpose of this Carecraft hearing.  The SFC submits that notwithstanding this it would be in the public interest for an order to be made that the Proposed Sum be paid as full and final settlement of the SFC’s claim under sections 214(2)(b) and (e) of the SFO for the following reasons:

(1)  It is well-established that the rationale for the Carecraft procedure is to enable the expeditious disposal of proceedings and avoid the substantial costs that would otherwise be incurred if there is a trial.  Similar to competition law cases, there is also a public interest in the settlement of cases brought by the SFC under section 214 of the SFO: Competition Commission v Kam Kwong Engineering Co Ltd[93], [11] and [14] to [16].

(2)  In the present case, the following factors militate in favour of ordering the Proposed Sum.

(3)  First, the payment of the Proposed Sum would ensure that (a) Combest receives a substantial amount of compensation and avoid the risks of litigation; and (b) Combest receives compensation at an early stage rather than after trial.  These are both considerable advantages which justify ordering a lesser sum.  It is noted that the amounts of compensation with respect to the overpayments for the GG and TAR Acquisitions are subject to expert valuation evidence[94]. Therefore, even if the wrongdoing of Dino Ng is established at trial, the precise amount that may be ordered is not certain.  The size and complexity of this case, which was instituted almost 5 years ago, also means that it would not likely be resolved soon.

(4)  Second, significant weight should also be placed on the fact that Combest itself, as the beneficiary of the intended compensation order, has agreed to the settlement terms.

(5)  Third, accepting the amount of the Proposed Sum has yielded (a) the agreement from Combest to declare the money received as special dividends and (b) the undertakings from Dream Star and Gabriel Ng to forfeit their entitlement thereto so as to increase the amount of special dividends distributed to the other shareholders.  This would not be achievable by an order for monetary compensation after trial.

56.As to the terms of the Tomlin schedule and respective undertakings by Dream Star and Gabriel Ng:

(1)  The SFC’s position is that Dream Star is controlled by Dino Ng[95] and Gabriel Ng is Dino Ng’s nominee[96], and the SFC does not admit the independence of Combest’s current ED, Ms Tang Shuk Kuen[97].  Also, as set out in [4] above, Combest has been delisted.  The SFC is concerned that (a) if any compensation is paid to Combest by Dino Ng, Dino Ng would have some way to procure Combest to pay the compensation back into his own pockets, and (b) even if the compensation is declared as special dividends and paid to Combest’s shareholders, a large portion of it would go back to Dino Ng via Dream Star and Gabriel Ng.

(2)  This is not admitted by the Respondents.  However, in order to address the SFC’s concerns, Combest, Dream Star and Gabriel Ng have agreed for the compensation received to be declared as dividends and for Dream Star and Gabriel Ng to forfeit their entitlement to their share of those dividends.

(3)  The Court has power to order a stay of proceedings on terms.  It is unnecessary for the Court to make any findings one way or the other: Re Homes Assured Corporation plc[98], 297F to G.

57.Given the foregoing considerations, I am satisfied that the compensation scheme is in the public interest as it would ensure the compensation paid by Dino Ng to Combest would go to its independent public shareholders.  The parties affected by such terms, namely Combest, Dream Star, and Gabriel, have also consented to them.  I also consider it appropriate to make an order under the inherent jurisdiction of the Court to stay proceedings on terms.

Disqualification Orders

58.The principles governing the making of disqualification orders are well-established: SFC v Tse On Kin[99], [26].  In gist:

(1)  The objectives of a disqualification order are twofold: (a) to protect the public against the future conduct of the respondent; and (b) as a general deterrence.

(2)  Generally speaking, the court has divided the maximum period of disqualification of 15 years into three brackets:

(a)  the top bracket, of disqualification for over 10 years, for particularly serious cases;

(b)  the middle bracket, of disqualification for between 6 to 10 years, for cases which, although serious, are not so serious as to merit a period of disqualification in the top bracket; and

(c)  the minimum bracket, of disqualification for up to 5 years, for relatively less serious cases.

(3)  The court takes into account all relevant circumstances, including the nature and seriousness of the conduct complained of; the structure and nature of the business of the company; the training, experience, skill and competence of the respondent; the conduct of the respondent (including any relevant admission); and other mitigating factors put forward on his or her behalf.

(4)  A reasonably broad-brush approach should be adopted.  Thus, previous cases can provide only limited assistance.

59.For Dino Ng, the agreed period of disqualification is 12 years.  Mr Eugene Fung SC[100], counsel for the SFC, submits that the duration is appropriate for the following reasons:

(1)  Dino Ng’s conduct was particularly serious.  As summarised in [39] above, he was the mastermind of, and wholly responsible for, all of the SFC’s areas of complaint and caused serious and substantial harm to Combest for his own benefit, in particular, defalcating very substantial sums of money.  Moreover, he procured the deception of the investing public and the SEHK by the misleading disclosures.

(2)  The present case is comparable to SFC v Wang Jian Hua & Ors[101] where the 1^st respondent therein tried (but failed) to sell an asset to the company at a massive profit to himself, using nominees to present a false impression of an arm’s length transaction to conceal his role[102].  The company ultimately suffered little or no loss because the acquisition did not go through, which was a mitigating factor.  The 1^st respondent was disqualified for 10 years[103].

(3)  In the present case, Dino Ng’s conduct was significantly more serious as (a) Dino Ng’s schemes were successful and did cause substantial harm to the Group, (b) two separate transactions were involved, and (c) Dino Ng’s schemes additionally involved the use of the newly injected businesses to maintain Combest’s listed status, deceiving the investing public and the SEHK.

(4)  The only mitigating factor is Dino Ng’s willingness to resolve the proceedings by the Carecraft procedure[104]. No credit should be given for Dino Ng’s agreement to pay compensation, given that he has already benefited from the compromise resulting in the lesser Proposed Sum.

60.Having regard to all these factors, I agree that the misconduct and breaches of duty established as against Dino Ng fall within the top bracket in terms of seriousness and the proposed term of 12 years of disqualification is appropriate.

61.As for Leo Liu, I consider that the agreed period of 8 years disqualification, which falls towards the top end of the middle bracket, is appropriate and justified having regard to the following matters:

(1)  Leo Liu was an ED, and actively and knowingly assisted Dino Ng.  This takes the present case beyond those of mere neglect or omission.

(2)  The 2^nd and 3^rd respondents in SFC v Wang Jian Hua[105], who were EDs, and found guilty of omission rather than commission, were disqualified for 6 years[106].

(3)  Given his active participation and the significant loss caused to the Company, Leo Liu’s conduct was significantly more serious than the EDs in SFC v Wang Jian Hua[107].

(4)  The only mitigating factor is Leo Liu’s willingness to resolve the proceedings by the Carecraft procedure[108].

62.For Spencer Lee, I agree with the SFC that his misconduct is similar to that of Leo Liu and a period of disqualification of 8 years should also be imposed on him.

Relief

63.So far as Combest is concerned, Mr Fung submits that upon the Court making an order in terms of the draft order, the winding up proceedings against Combest will be stayed to allow time for distribution of special dividends[109], after which the SFC will apply to dismiss the Petition.  It is, therefore, not necessary for the Court to make any order in respect of Combest.

64.For the foregoing reasons, I find it proper to make an order in the terms sought in the draft[110].

Postscript

65.At the hearing, I asked the SFC to explain whether the present case has been referred to the Commercial Crimes Bureau of the Hong Kong Police (“CCB”) or to the Department of Justice (“DOJ”) for consideration of any potential criminal investigation or proceedings.

66.By way of letter dated 7 April 2025, the SFC confirmed that it had referred the case to the CCB on 20 June 2019. It further stated that while it had considered pursuing criminal proceedings against, inter alios, the Respondent Directors for offences under the SFO, legal advice indicated there was insufficient evidence to establish a case of fraud or deception.  Consequently, the SFC found no adequate grounds for a referral to the DOJ, and none was pursued.

67.The present case clearly bears the hallmarks of a fraud perpetrated upon Combest and it is opportune to remind regulators, including the SFC, of the importance of referring suspected criminal matters to law enforcement agencies expeditiously.  Section 187(2) of the SFO limits the admissibility of evidence of a statement or answer in criminal proceedings where privilege against self-incrimination has been claimed.  Delays in referral risk prejudicing the prosecutorial process.  While the SFC’s focus is regulatory, it is incumbent upon the SFC to remain vigilant in identifying matters that by virtue of their character and seriousness may go beyond the regulatory and justify investigation by the Police or the DOJ.

SCHEDULE FOR CARECRAFT PROCEDURE IN RESPECT OF THE RESPONDENTS

A.  Introduction

1.   On 18 May 2020, the Securities and Futures Commission (“Petitioner”) issued these proceedings under, inter alia, section 214 of the Securities and Futures Commission,Cap.571(“SFO”),seeking,inter alia:

1.1.  disqualification orders under section 214(2)(a) and/or section 214(2)(d)of the SFO against the 2^nd Respondent, Mr. Ng Kwok Fai (“Dino Ng”),the 3^rd Respondent, Mr. Liu Tin Lap (“Leo Liu”), and the 4^th Respondent ,Mr. Lee Man To (“Spencer Lee”);[111]

1.2.  order under section 214(2)(e) of the SFO for Dino Ng, Leo Liu and Spencer Lee to pay, on a joint and several basis, compensation to the 1^st Respondent, Combest Holdings Limited (“Combest”),and its subsidiaries in the aggregate sum of HK$293,459,926, together with interest thereon;and

1.3.  costs.

2.  Subject to the approval of this Court, the Petitioner and the Respondents consent to the disposal of these proceedings by way of the Carecraft procedure.

3.  This Schedule is produced in order to set out the material facts relied upon by the Petitioner in these proceedings that are not disputed by the Respondents, for the purpose of disposing of these proceedings by way of the Carecraft procedure.

4.  Solely for the purpose of resolving these proceedings by way of the Carecraft procedure, and by reference to the facts set out in Section B below (which are not disputed by the Respondents), the Respondents accept that during the relevant period, the business and affairs of Combest have been conducted in a manner described in sections 214(1)(a),(b),(c) and (d) of the SFO.

5.  On the basis of the facts set out in Section B below and the agreed mitigating factors set out in Section C below, the Petitioner and the Respondents agree, and the Respondents accept, that it would be appropriate for the orders set out in the Annexure hereto to be made against them.

6.  In the event that this Court makes any order sought against the Respondents by reference to this Schedule, the Petitioner and the Respondents agree that this Schedule be annexed to this Court’s judgment and will jointly seek a direction to that effect. Without prejudice to any of the Petitioner’s rights, the Petitioner also specifically reserves the right to (a) disclose this Schedule to third parties where it appears proper to do so in the public interest, including, but not limited to, making use of the Schedule for the purpose of any press release issued in respect of these proceedings and (b) refer to this Schedule for all purposes ancillary to, connected with and/or arising out of these proceedings..

7.  The Petitioner and the Respondents agree that in the event this Court for whatever reason is of the view that these proceedings shall not be dealt with by way of the Carecraft procedure or that a full hearing is appropriate, no admission or concession by either the Petitioner or the Respondents nor any proposed orders herein shall be referred to or relied upon by either party at any subsequent hearing in these proceedings without the prior written consent of both parties.

B.  Undisputed Facts

B1.  ombest

8.  Combest was incorporated on 28 August 2001 in the Cayman Islands and is a non-Hong Kong company registered under Part XI of the predecessor Companies Ordinance, now Part 16 of the Companies Ordinance (Cap.622). Since 8 February 2002 and until 24 December 2020, Combest shares were listed on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited. Combest and its subsidiaries from time to time will be referred to as the “Group”..

9.  Combest was an investment holding company and all business activities were undertaken by its subsidiaries, in particular, the GG and TAR Groups (defined below)..

B2.  The Respondent Directors

10.  Dino Ng was a shadow director of Combest since 2016 by reason of:

10.1  the fact that Leo Liu and Spencer Lee, the only executive directors (“EDs”) of Combest at the material times, were accustomed to and did follow his directions and instructions with respect to the Group’s affairs; and

10.2  the fact that he was allowed to and did direct the operations of the New Businesses (defined below), being all of the business operations of the Group since October 2016.

11.  Leo Liu and Spencer Lee held the following positions at Combest:

Name	Position	Term
Leo Liu	Independent non- Executive director (“INED”)	14 July 2016 to 22 November 2016
	Chairman and ED	22 November 2016 to 22 May 2020
	Non-executive director (“NED”)	22 May 2020 to 10 August 2020
Spencer Lee	ED	18 February 2009 to 22 May 2020
	NED	22 May 2020 to 10 August 2020
	Financial controller	1 July 2008 to 22 May 2020
	Company secretary	1 July 2008 to 10 August 2020

12.  Between 2016 and the commencement of these proceedings on 18 May 2020, Leo Liu and Spencer Lee were the only de jure EDs of Combest.

B3.  The Group’s Old Business

13.  In January 2016, the controlling shareholder of Combest was Wang Linjia (“Wang”), who through Dream Star owned approximately 22.85% of Combest’s shares, and Combest carried on business of manufacturing healthcare products and OEM consumer electronic products (“Old Business”).

14.  Between September 2016 and January 2017,

14.1  The relevant Combest share certificates (issued in the name of Dream Star) were given to Dino Ng’s brother, Ng Kwok Wai (“Gabriel Ng”); and

14.2  Combest disposed of the subsidiary that held and operated the Old Business to Dream Star.

15. In the meantime, Combest entered into two major acquisitions, following which it acquired two new lines of businesses (collectively “New Businesses”), namely:

15.1  the GG Acquisition (defined in Section B4 below), through which it acquired Gold Smart and Jianghe (both defined in Section B4 below), which were said to operate money lending and advisory services businesses respectively (“1st New Business”); and

15.2  the TAR Acquisition (defined in Section B6 below), through which it acquired 51% of Ultra Rich Global Limited (“Ultra Rich”), which was said to operate the fund management business through its wholly owned subsidiaries (“2nd New Business”).

B4.  1st Area of Complaint – The GG Acquisition

16.  On 6 January 2016, pursuant to a sale and purchase agreement dated 4 January 2016, Combest’s wholly-owned subsidiary Amble Precious Holdings Limited (“Amble Precious”) acquired Giant Goal Limited (“Giant Goal”) and its subsidiaries, Jianghe Capital Limited (“Jianghe”) and Gold Smart Finance Limited (“Gold Smart”) (collectively “GG Group”), from Grand Castle Limited (“Grand Castle”, which sole shareholder was Wong Tin Lung, “Wong”) for a consideration of HK$70 million (“GG Consideration”), payable by a promissory note with one-year term (“GG Acquisition”).

17. The GG Acquisition bore the following questionable features.

17.1  When Giant Goal (including its subsidiary Gold Smart) was acquired by Dino Ng from Landing International Development Limited (stock code: 582, now known as Shin Hwa World Limited) (“Landing”) on 31 March 2015 and transferred to Grand Castle (i.e. to Wong) on 1 April 2015 (i.e. 8 months before the GG Acquisition), the considerations of these two transactions were the same, i.e., only HK$110,000.

17.2  Although the GG Group claimed to have unaudited net assets of HK$15.53 million and unaudited profit of HK$16.35 million for the year ended 31 December 2015 and revenue of HK$31.53 million for the year ended 30 June 2016 (“FY2016”), at least 76.36% of its total revenue for FY2016 was generated by entities related to Dino Ng, namely Power Booster Limited, Top Force Ventures Limited, Landing and Elegant Mark Investment Limited (“Elegant Mark”).

17.3  The revenue of the 1st New Business, despite being under the same apparent management and there being no identifiable change in the underlying business climate or environment, went into free-fall since mid- 2017:

Segment of 1st New Business	Year 2015/2016	Year 2016/2017	Year 2017/2018	Year 2018/2019 (unaudited)
Money Lending Business	4,246,684.93	14,679,116.99	2,829,347	900,000
Advisory Business	27,284,516	26,755,484	3,760,406.67	2,280,000

17.4  The true value of the GG Group at the time of the GG Acquisition was thus no more than HK$15.5 million; yet immediately before completion of the GG Acquisition, HK$15 million cash was withdrawn out of Jianghe and the GG Group and transferred to Elegant Mark. The Group however paid HK$70 million as consideration for the GG Acquisition in January 2017. Accordingly, the GG Acquisition was substantially over-priced by approximately HK$61.5 million[112].

18.  Further, the GG Acquisition was not a bona fide commercial transaction between independent parties.

18.1  The GG Group was beneficially owned by Dino Ng.  He transferred the GG Group to Wong, a delivery driver, on 1 April 2015 and only ceased to be the sole director of Giant Goal and Gold Smart shortly before the GG Acquisition on 31 December 2015 and 30 December 2015 respectively.

18.2  The whole of the GG Consideration was paid to Elegant Mark, another company of which Wong was said to be the sole shareholder and director, but was in fact controlled by Dino Ng, and which bank account’s signatory was Gabriel Ng.

18.3  Dino Ng directed Spencer Lee to complete the GG Acquisition.  Upon receiving directions from Dino Ng, Spencer Lee together with Yeung Chok Cheong (“Robert Yeung”), Chan Ka Wing (“Calvin Chan”) and Lam Chun Yin (“Louis Lam”) transferred the GG Group to, and arranged the acquisition of the GG Group by, Combest. Spencer Lee resolved to approve the GG Acquisition at Combest’s board meeting and executed the agreement dated 4 January 2016 on behalf of Amble Precious.

19.  Subsequent to the GG Acquisition, Dino Ng continued to maintain control over, and direct the operations of, the GG Group. As mentioned in paragraph 17.2 above, for FY 2016, at least 76.36% of the total revenue generated by the GG Group consisted of income derived from entities related to Dino Ng.  While the main individuals involved in the management or operation of Gold Smart and Jianghe (i.e. the operations subsidiaries of the GG Group) were Robert Yeung (sole director of Gold Smart from 7 January 2016 to 20 July 2017; sole director of Jianghe at all material times since 7 January 2016), Louis Lam (sole director of Gold Smart from 30 December 2015 to 7 January 2016; sole director of Jianghe from 17 July 2014 to 7 January 2016; employee of Jianghe from 1 January 2016 to 31 January 2019), Leo Liu (director of Gold Smart from 20 July 2017 to 10 July 2020) and Spencer Lee (director of Gold Smart from 20 July 2017 to 10 July 2020), it was Dino Ng who directed the conduct of the GG Group’s affairs.

20.  In the premises, it is to be inferred that:

20.1  Dino Ng procured the GG Consideration to be siphoned off from Combest to enrich himself.

20.2   The newly acquired GG Group provided Combest with the appearance of a substantial level of operations and assets,[113] so that Combest could satisfy rule 17.26 of the Rules Governing the Listing of Securities on the GEM (“GEM Listing Rules”) even without the Old Business.

21.  In causing Combest to enter into the GG Acquisition with knowledge of the aforesaid matters, Dino Ng and Spencer Lee have breached their fiduciary duties to Combest.

22.  None of the matters set out above were disclosed by Combest to the investing public. Rather, by an announcement dated 4 January 2016 (“2016 Announcement”) procured by Dino Ng and approved by Spencer Lee, Combest represented that the GG Acquisition was a bona fide arm’s length commercial transaction that was executed in the interests of Combest.

B5.  2nd Area of Complaint – Fictitious and Artificial Businesses of the GG Group after the GG Acquisition

23.  Subsequent to the GG Acquisition, the business conducted by the GG Group comprised only fictitious or artificial businesses:

23.1  The 1st New Business comprised a “Money Lending Business” and a “Advisory Business”. Both businesses were conducted by (inter alios) Spencer Lee and Leo Liu under the ultimate directions of Dino Ng.

23.2  The customers who borrowed money from the GG Group were related to Dino Ng and/or procured by Dino Ng to do so. The money lending transactions were not bona fide commercial transactions at arm’s length.

23.3  The customers of the Advisory Business were also related to Dino Ng and/or procured by Dino Ng to seek such advice. No real advice was given and the scope of work and advisory fees were artificially determined by Dino Ng.

24.  Nevertheless, the Money Lending and Advisory Businesses were represented to be bona fide profitable businesses in Combest’s publicly disclosed financial statements.

25.  In the premises, Dino Ng has breached his fiduciary duties to Combest, and Spencer Lee and Leo Liu (starting from their respective appointments as directors) have likewise breached their fiduciary duties in knowingly allowing the operations of the GG Group to be ultimately directed by Dino Ng and failing to supervise such operations at all.

B6.  3rd Area of Complaint – The TAR Acquisition

26.  Pursuant to a sale and purchase agreement (“TAR SPA”) dated 1 April 2017, Combest acquired 51% of the issued share capital of Ultra Rich (which in turn solely held Fine One Global Limited (“Fine One”) which in turn solely held TAR Fund Management (Cayman) Limited (“TAR FM”), collectively “TAR Group”) from Novel Shine Limited (“Novel Shine”) for HK$170 million (“TAR Consideration”) payable in cash, with a profit guarantee (“Profit Guarantee”) from Novel Shine that the pre-tax profit for the TAR Group between 1 January and 31 December 2017 would be no less than HK$30 million (i.e. the “TAR Acquisition”).

27.  The TAR Acquisition bore the following questionable features:

27.1  In around September 2016 (i.e. 7 months before the TAR Acquisition), Dino Ng procured that TAR FM (which then operated a fund management business) be acquired from a third party by Fine One (Lee Chi Hwa Joshua (“Joshua Lee”) was then its sole shareholder and director) for HK$3 million, which came from Elegant Mark.  At that time TAR FM only managed one fund, and all dividends in such fund were retained by the vendor. Effectively TAR FM was acquired as a shell.

27.2  In November 2016, Dino Ng then caused Ultra Rich to acquire the entire share capital of Fine One from Joshua Lee (who was also the sole shareholder and director of Novel Shine), using such transfer to artificially fix a value of TAR FM at HK$110 million. At that time, TAR FM had no, or minimal, operation.

27.3  Between December 2016 and April 2017, Dino Ng caused various companies controlled by, associated with, or related to him (as the case may be) to subscribe for funds newly set up by TAR FM to create the appearance of substantial operation and assets under management. These subscriptions were funded by “Circular Fund Flow 1” (as depicted in Appendix 1) and in part “Circular Fund Flow 2” (as depicted in Appendix 2), which involved companies controlled by, associated with, or related to Dino Ng[114] (as the case may be) first making subscriptions, and the fund administrator (Shine Fast, defined in paragraph 29.1 below) thereafter advancing loans to those entities effectively repaying them.

27.4  The true value of the 51% in Ultra Rich at the time of the TAR Acquisition was thus no more than HK$2.2 million, which was about 1.3% of the TAR Consideration of HK$170 million. Accordingly, the TAR Acquisition was substantially over-priced by approximately HK$167.8 million[115].

27.5  The Profit Guarantee was arbitrarily fixed, in that it far exceeded the level of profits the TAR Group had reported prior to the TAR Acquisition, and was put forward by Dino Ng and accepted by Leo Liu.

28.  Further, the TAR Acquisition was not a bona fide commercial transaction involving independent parties:

28.1  As set out in paragraph 27.1 above, Dino Ng procured the acquisition of TAR FM by Fine One, and funded the same through Elegant Mark.

28.2  The TAR Consideration was paid to Global Treasure Bond Limited (“Global Treasure BVI”), a company owned by Dino Ng.

29.  Subsequent to the TAR Acquisition, it was Dino Ng who continued to direct the operations of the 2nd New Business:

29.1  Dino Ng was the sole bank signatory of Shine Fast Limited (“Shine Fast”), the fund administrator. In respect of the 2nd New Business, Calvin Chan, the then sole director and shareholder (indirect) of Shine Fast, acted on Dino Ng’s directions when conducting the affairs of Shine Fast. Through these, Dino Ng controlled the funds under TAR FM and their assets

29.2  After the TAR Acquisition, Dino Ng using companies controlled by, associated with, or related to him[116](as the case may be) and through “Circular Fund Flow 3” (depicted in Appendix 3), “Circular Fund Flow 4” (depicted in Appendix 4) and “Circular Fund Flow 5” (depicted in Appendix 5) created the appearance of significant volume of fund subscription and also fund lending

29.3  Dino Ng approved some of the purported loans, including those purported loan agreements that were prepared after the relevant fund transfers had already taken place, as ex post facto justification for the fund transfers.

29.4  In respect of the TAR Acquisition and the operation of the TAR Group, the individuals involved in the management or operation of the entities within the TAR Group, including Joshua Lee (sole director of Novel Shine, Ultra Rich, and Fine One at all material times; director of TAR FM from 25 October 2016 to 12 April 2017), Chan Lap Hung (director of TAR FM at all material times since 22 November 2016) and Lao Ka Lam (director of TAR FM at all material times since 12 April 2017), acted upon Dino Ng’s directions when conducting the affairs of the TAR Group.

30.  In the premises, it is to be inferred that Dino Ng procured the TAR Acquisition to siphon off the TAR Consideration from Combest to enrich himself and to create the appearance of a substantial level of operations and assets, so that Combest could satisfy rule 17.26 of the GEM Listing Rules even without the GG Group..[117]

31.  In causing Combest to enter into the TAR Acquisition with knowledge of the aforesaid, Dino Ng has breached his fiduciary duties to Combest.

32.  In:

32.1  resolving to approve the TAR Acquisition at Combest’s board meeting (by both Spencer Lee and Leo Liu) and executing the TAR SPA on behalf    of Combest (by Spencer Lee);

32.2  knowingly acquiescing in the payment of the TAR Consideration to Global Treasure BVI; and

32.3  failing to conduct any proper due diligence, any negotiations with Novel Shine, or any independent valuation of the TAR Group, and instead acting on the instructions from Dino Ng in approving the TAR Acquisition,

with knowledge of the aforesaid circumstances, Spencer Lee and Leo Liu have breached their fiduciary duties to Combest.

33.  None of the matters set out above were disclosed by Combest to the investing public. Rather, by an announcement dated 1 April 2017 (“2017 Announcement”) arranged by Dino Ng and approved by Leo Liu and Spencer Lee, Combest represented that the TAR Acquisition was an arm’s length commercial transaction that was in the interests of Combest.

B7.  4th Area of Complaint – Fictitious and Artificial Business of the TAR Group after the TAR Acquisition

34.  Subsequent to the TAR Acquisition, certain businesses conducted by the TAR Group were fictitious or artificial businesses:

34.1  The 2nd New Business was the management of various investment funds (“Purported Funds”) from which the TAR Group purportedly earned management fees (“Fund Management Business”).

34.2  Approximately 95% of the subscriptions (totalling HK$2,686 million) to the Purported Funds between December 2016 and 2017 were sourced from entities related to Dino Ng and/or procured by Dino Ng. As explained in paragraphs 27.3 & 29.2 above, these were part of the Circular Fund Flows which had no commercial purpose, and had the result that a large portion of the funds returned either to their source or other entities controlled by, associated with, or related to Dino Ng (as the case may be).

34.3  In particular, a total of approximately HK$990.4 million of subscriptions to the Purported Funds were ultimately transferred back to Dino Ng and his nominee entities.

34.4  Furthermore, Dino Ng procured the Purported Funds to make loans  totalling HK$1,600 million to Dino Ng’s nominee entities.

35.  The purpose and effect of the above was to artificially inflate the assets under management of the Purported Funds and the revenue of the TAR Group, resulting in:

35.1  representations in Combest’s publicly disclosed financial statements that the Fund Management Business was a bona fide profitable business; and

35.2  the satisfaction of the Profit Guarantee (paragraph 26 above).

36.  Dino Ng’s aforesaid control of the operations of the TAR Group for improper purposes constituted a breach of his fiduciary duties. Further, in breach of their fiduciary duties, Spencer Lee and Leo Liu, who were Combest’s sole EDs at the time, knowingly facilitated the operations of the TAR Group to be controlled by Dino Ng and failed to supervise such operations at all.

B8.  Losses Suffered by the Group

37.  As a result of the GG and TAR Acquisitions, the Group paid more to acquire the GG and TAR Groups than they were worth, thereby suffering loss and damage in the amounts of HK$61,474,863 and HK$167,783,254 respectively.

38.  Furthermore, the Group, procured by Dino Ng with the knowing acquiescence of Spencer Lee and Leo Liu, borrowed money from and paid interest to certain entities controlled by, associated with, or related to Dino Ng (as the case may be) (“Combest Loans”):

Loan No.	Date of Loan Agreement	Lender	Borrower	Total Drawn Down (HK$)	Total Interest Paid(HK$)
1	21 Jan 2016	Elegant Mark	Giant Goal (later substituted by Combest on 1 July 2016)	180,000,000	1,190,959
2	30 Dec 2016	Top Force	Amble Precious	640,000,000	8,534,795
3	1 Jan 2017	Simsen Asset Management (Asia) Limited	Combest	90,000,000	3,080,548
4	24 Mar 2017	Elegant Mark	TAR FM	100,000,000	2,136,986
5	30 Aug 2017	Top Force	TAR FM	100,000,000	1,989,041
6	27 Dec 2017	TAR Opportunities Fund SPC	Amble Precious	283,000,000	12,700,110
7	27 Dec 2017	TAR Opportunities Fund SPC	TAR FM	60,000,000	2,269,370
8	6 Feb 2018	TAR Opportunities Fund SPC	TAR FM	2,000,000
				Total:	31,901,809

39.  The Combest Loans were artificial and had no commercial purpose.  None of the borrowers or the Group had any commercial need to borrow the Combest Loans or pay interest thereon, and the Combest Loans were part of the artificial Circular Fund Flows (as particularised in Appendix 6).  Therefore, the payments of interest on the Combest Loans were unnecessary, contrary to the Group’s interests and resulted in a loss suffered by the Group in the amount of HK$31,901,809.

40.  For Combest Loan No.3, Combest also paid an introducer’s fee of HK$32,300,000 (“Introducer’s Fee”) to United Simsen Bullion Limited, a company controlled by, associated with, or related to Dino Ng.  The Introducer’s Fee was likewise artificial and had no commercial purpose.

41.  In the premises, as a result of Dino Ng’s, Spencer Lee’s and Leo Liu’s breaches of fiduciary duties, the Group suffered a total loss of HK$293,459,926.

B9.  False and Misleading Disclosure to Combest’s Shareholders and the Investing Public and Breaches of the GEM Listing Rules

42.  By reason of the matters in Section B4 and Section B6 above, the 2016 and 2017 Announcements were false and misleading (paragraphs 22 and 33 above).

43.  Given that (i) the Advisory, Money Lending and Fund Management Businesses constituted the whole of the New Businesses and made up 100% of Combest’s business since October 2016 and (ii) the revenue and profit purportedly generated from the New Business were not derived from bona fide commercial activities, Combest’s financial statements published from 2017 to 2019 were false and misleading in their entirety.

44.  Combest’s 2016, 2017 and 2018 annual reports also misrepresented to the public that:

44.1  the 1st and 2nd New Businesses were bona fide, profitable commercial businesses; and

44.2  Combest’s executive directors were properly supervising Combest’s businesses; exercising their own independent judgment when operating the businesses of Combest instead of following the instructions of an undisclosed third party (viz. Dino Ng); and were operating the businesses of Combest in the interests of Combest instead of the interests, or to further the private purposes, of Dino Ng.

45.  The foregoing matters constituted a breach of rule 17.56 of the GEM Listing Rules.

46.  Further, by reason of the acquisition and operation of the New Businesses, Combest continued to retain its listing, and its shares were not suspended, notwithstanding that it had no (or no substantial) genuine operations, contrary to  rule 17.26 of the GEM Listing Rules.

47.  Still further, by reason of the matters described herein, Combest’s affairs were conducted in a way that was fundamentally inconsistent with the spirit and purpose of the GEM Listing Rules (as stated in rules 2.01 and 2.06 and section 21(1) of the SFO), and hence an abuse of its listing status.

B10.  The Business and Affairs of Combest Have Been Conducted in a manner falling within the terms of Section 214(1) of the SFO

48.  By reason of the matters set out in Sections B3 to B9 above, the business and affairs of Combest have been conducted in a manner described in sections 214(1)(a) to (d) of the SFO, namely:

(a)  oppressive to its members or any part of its members;

(b) involving defalcation, fraud, misfeasance or other misconduct towards it or its members or any part of its members;

(c)  resulting in its members or any part of its members not having been given all the information with respect to its business or affairs that they might reasonably expect; and

(d) unfairly prejudicial to its members or any part of its members.

B11.  Dino Ng’s Misconduct

49.  Dino Ng, as a shadow director of Combest since 2016, acknowledges and accepts that he was wholly responsible for the business and affairs of Combest having been conducted in the manner described in paragraph 48 above.

50.  In particular:

50.1  In breach of fiduciary duty, Dino Ng procured (i) Combest to enter into the GG Acquisition and the TAR Acquisition, and (ii) the fictitious, artificial and exaggerated revenue and business operations of the New Businesses at the expense of and to the detriment of Combest (and its subsidiaries) for his own private purposes.

50.2  In further breach of fiduciary duty, Dino Ng procured the defalcation of the Group’s property through the payments of: the GG Consideration and the TAR Consideration; interest on the Combest Loans; and the Introducer’s Fee, to his nominee entities or entities controlled by, associated with, or related to him (as the case may be), causing the Group to suffer a total loss of HK$293,459,926.

50.3  In yet further breach of fiduciary duty, Dino Ng procured Combest to make the false and misleading disclosure in the 2016 and 2017 Announcements, the financial statements from 2017 to 2019 and 2016 to 2018 annual reports as particularised in Section B9 above, in breach of rule 17.56 of the GEM Listing Rules.

B12. Leo Liu’s Misconduct

51.  Leo Liu, as an INED of Combest from 14 July 2016 and then ED and Chairman from 22 November 2016 to 22 May 2020, acknowledges and accepts that he was responsible for the business and affairs of Combest having been conducted in the manner described in paragraph 48 above.

52.  In particular:

52.1  In breach of fiduciary duty, Leo Liu approved the TAR Acquisition in the circumstances in paragraph 32 above.

52.2  Moreover, in breach of fiduciary duty, Leo Liu failed to properly supervise the operations of the GG and TAR Groups even though, in addition to being a director of Combest, Leo Liu was a director of Gold Smart (an operations subsidiary of the GG Group) from 20 July 2017 to 10 July 2020. In particular, Leo Liu acted upon Dino Ng’s directions and knowingly facilitated the operations of the GG and TAR Groups to be directed and controlled by Dino Ng. He further knew that such direction and control were not in the interests of Combest but instead were for Dino Ng’s private purposes.

52.3  In further breach of fiduciary duty, Leo Liu was personally involved in assisting Dino Ng to increase the subscriptions to the Purported Funds by approximately HK$142 million (“$142M Subscriptions”), by procuring Ample Success Developments Limited, a subsidiary of Combest (of which Leo Liu was a director), to make those subscriptions using funds from Combest’s account that were borrowed by a sister company as part of Combest Loan No.2. Those subscriptions had no commercial purpose and were part of the artificial Circular Fund Flow 3 (Step 3C of Appendix 3).

52.4  In yet further breach of fiduciary duty, Leo Liu knowingly assisted Dino Ng’s defalcation of the Group’s property by approving the TAR Acquisition and knowingly acquiescing in the payments of: the GG and TAR Consideration; interest on the Combest Loans; and the Introducer’s Fee, to Dino Ng’s nominee entities or entities controlled by, associated with, or related to Dino Ng (as the case may be), causing the Group to suffer a total loss of HK$292,268,967.[118]

52.5  Still further, in breach of fiduciary duty, Leo Liu also approved the contents of the 2016, 2017 and 2018 Annual Reports, the 2017 Announcement and the financial statements of Combest in the years 2017 and 2018 knowing the contents to be false and misleading (see Section B9), causing Combest to be in breach of rule 17.56 of the GEM Listing Rules.

B13. Spencer Lee’s Misconduct

53.  Spencer Lee, as an ED of Combest from 18 February 2009 to 22 May 2020, acknowledges and accepts that he was responsible for the business and affairs of Combest having been conducted in the manner described in paragraph 48 above.

54.  In particular:

54.1  In breach of fiduciary duty, Spencer Lee approved the GG Acquisition and the TAR Acquisition in the circumstances in paragraphs 18.3, 20 and       32 above.

54.2  Moreover, in breach of fiduciary duty, Spencer Lee failed to properly supervise the operations of the GG and TAR Groups even though, in addition to being a director of Combest, Spencer Lee was a director of Gold Smart (an operations subsidiary of the GG Group) from 20 July 2017 to 10 July 2020. In particular, Spencer Lee acted upon Dino Ng’s directions and knowingly allowed the operations of the GG and TAR Groups to be directed and controlled by Dino Ng. He further knew that such direction and control were not in the interests of Combest but instead was for Dino Ng’s private purposes.

54.3  In further breach of fiduciary duty, Spencer Lee witnessed the subscription agreements for the $142M Subscriptions on the directions of Dino Ng and failed to stop Leo Liu from executing them.

54.4  In yet further breach of fiduciary duty, Spencer Lee knowingly assisted Dino Ng’s defalcation of the Group’s property by approving the GG Acquisition and the TAR Acquisition and knowingly acquiescing in the payments of the GG Consideration and TAR Consideration; interest on the Combest Loans; and the Introducer’s Fee, to Dino Ng’s nominee entities or entities controlled by, associated with, or related to Dino Ng (as the case may be), causing the Group a total loss of HK$293,459,926.

54.5  Still further, in breach of fiduciary duty, Spencer Lee approved the contents of the 2016, 2017 and 2018 Annual Reports, the 2016 and 2017 Announcements and the financial statements of Combest in the years 2017 and 2018, despite knowing that the contents were false and misleading (see Section B9), causing Combest to be in breach of rule 17.56 of the GEM Listing Rules.

C.  Mitigating Factors

55.  The Respondents have agreed to conclude these proceedings by way of the Carecraft procedure which saves the time and costs of the Petitioner and the Court.

Dated the   day of   2024.

Annexure – Draft Court Order

Court Order

(1) The 2^nd Respondent shall not, for a period of 12 years from the date of this Order, without leave of the Court:

(a) be, or continue to be, a director, liquidator, or receiver or manager of the property or business of the 1^st Respondent or any other corporation, including any of the 1^st Respondent’s subsidiaries and affiliates; and

(b) in any way, directly or indirectly, be concerned, or take part, in the management of the 1^st Respondent or any other corporation, including any of the 1^st Respondent’s subsidiaries and affiliates.

(2) The 3^rd Respondent shall not for a period of 8 years from the date of this Order, without leave of the Court:

(a) be, or continue to be, a director, liquidator, or receiver or manager of the property or business of the 1^st Respondent or any other corporation, including any of the 1^st Respondent’s subsidiaries and affiliates; and

(b) in any way, directly or indirectly, be concerned, or take part, in the management of the 1^st Respondent or any other corporation, including any of the 1^st Respondent’s subsidiaries and affiliates.

(3) The 4^th Respondent shall not for a period of 8 years from the date of this Order, without leave of the Court:

(a) be, or continue to be, a director, liquidator, or receiver or manager of the property or business of the 1^st Respondent or any other corporation, including any of the 1^st Respondent’s subsidiaries and affiliates; and

(b) in any way, directly or indirectly, be concerned, or take part, in the management of the 1^st Respondent or any other corporation, including any of the 1^st Respondent’s subsidiaries and affiliates.

(4) Within 56 days from the date of this Order (or such other times as may be agreed by the parties or approved by the Court), notwithstanding the undertakings annexed to the Court Order dated 15 February 2022 (Undertakings), the 2^nd Defendant shall transfer or procure the transfer of sums totalling HK$192,883,683  – comprising (a) HK$148,000,000 in the Top Force Account (as defined and referred to in paragraphs 4.1(a) and (b) of the Undertakings) and (b) HK$44,883,683 in the 2^nd Respondent’s account with Bluemount Securities Limited (as referred to in paragraph 4.1(c) of the Undertakings) to the Administrator into the Administrator’s Account (each as defined in the Schedule attached hereto), in full and final settlement of Prayers 3 and 4 of the Re-Amended Petition and the Amended Points of Claim.

(5) The Proceedings be stayed upon the terms set out in the Schedule, which has been agreed by the parties, except for the purpose of carrying such terms into effect.  For the avoidance of doubt, the aforesaid stay shall not affect the Undertakings, which (save as excepted in paragraphs 4 above and 6(b) below) shall continue in accordance with their terms.

(6) As to costs of the Proceedings up to the date of this Order:

(a) The 2^nd, 3^rd and 4^th Respondents shall jointly and severally pay the SFC the costs incurred by the SFC (save and except the costs incurred by the SFC in the application for the appointment of provisional liquidators) with certificate for 2 counsel, to be taxed if not agreed.

(b) The Undertakings shall not prohibit the 2^nd Respondent from transferring or procuring the transfer of money to the SFC to pay its said costs.

(c) Interest on the costs order made by the Honourable Mr Justice Harris dated 5 May 2022 against the SFC shall only start running from the date on which such costs are taxed or agreed.

(7)  The parties be at liberty to apply.

…

Schedule

(1)  Within 56 days from the date of the Court Order (or such other times as may be agreed by the parties or approved by the Court), the 2^nd Respondent shall cause HK$148,000,000 in the Top Force Account (as defined and referred to in paragraphs 4.1(a) and (b) of the Undertakings) and HK$44,883,683 in the 2^nd Respondent’s account with Bluemount Securities Limited (as referred to in paragraph 4.1(c) of the Undertakings) (collectively Funds) to be paid to the Administrator and into the Administrator’s Account (as defined in sub-paragraphs 2 and 3(ii) below):

(i)  as payment by the 2^nd, 3^rd and 4^th Respondents of a total sum of HK$192,443,683 (Compensation) in full and final settlement of the 2^nd to 4^th Respondents’ liabilities to pay the 1^st Respondent as pleaded in Prayers 3 and 4 of the Re-Amended Petition and the Amended Points of Claim both filed on 11 May 2022, and for the purposes of distributing the Compensation as special dividends to the 1^st Respondent’s shareholders as at the date when the Funds are deposited in the Administrator’s Account (or the attest date if the Funds are deposited in multiple tranches on multiple dates) (Distribution); and

(ii)  as the upfront payment of a total sum of HK$440,000 to the Administrator (defined in paragraph 2 below) for the purposes of fully or partially discharging the remuneration, costs and expenses referred to in paragraph 4 below.

(2)  Bruno Arboit of Kroll (HK) Limited be jointly appointed by the Petitioner and the 1^st Respondent (Joint Appointors) as administrator (Administrator) from the date of the Court Order for the following purposes:

(i) to receive, hold and administer the Funds;

(ii) to implement and administer the Distribution; and

(iii) to perform all ancillary and incidental duties as may be directed by the Joint Appointors.

(3)  The terms of appointment of the Administrator shall (at a minimum) include terms to the effect that the Administrator shall have the power and duties to take all necessary steps to deal with the following:

(i) to receive, hold and administer the Funds for the purposes identified in paragraph 1 above, including to exercise, in relation to the Funds, or any part thereof, all such powers, authorities and things as the Administrator would be capable of exercising if he was the absolute beneficial owner of the same and to use the name of the 1^st Respondent as necessary for such purposes;

(ii) the Funds, when received by the Administrator pursuant to sub-paragraph (i) above, shall be held in a designated bank account or accounts opened in the name of the Administrator, and such account(s) shall be interest bearing pending distribution or payment contemplated under the Court Order (Administrator’s Account);

(iii) to carry out his functions and duties expeditiously and use all reasonable efforts to implement and administer the Distribution within 28 days from the date of receipt of the Funds by the Administrator (or such other times as may be agreed by the parties or approved by the Court);

(iv) to correspond with any persons and advertise and make announcements as the Administrator deem fit for the purposes of the Distribution;

(v) to do all acts, take all measures and/or execute any documentation in relation to the Funds as the Administrator see fit for the purposes of the Distribution;

(vi) to keep proper accounts of all payments received and made pursuant to the Court Order, report and provide supporting documents to the parties on the progress of the Distribution from time to time, and report to the Joint Appointors upon conclusion of the Distribution;

(vii) to settle the remuneration, costs and expenses incurred by the Administrator himself for the purposes of the administration of the Funds; and

(viii) to do all other things ancillary or incidental to the exercise of the foregoing powers.

(4)  The Administrator’s remuneration will be charged for the time he reasonably spends on this matter, and he is entitled to charge all reasonable out-of-pocket costs, expenses and disbursements properly incurred in receiving, holding and administrating the Funds.  The Administrator’s remuneration, out-of-pocket costs, expenses and disbursements shall be borne by the Respondents.  If the total amount of the Administrator’s remuneration, out-of-pocket costs, expenses and disbursements turns out to exceed HK$440,000, the Respondents shall pay the amount in excess to the Administrator. The Respondents shall also indemnify the Petitioner for any amounts paid by the Petitioner to the Administrator as a result of any failure by the Respondents to pay the Administrator as provided for above. The Administrator shall maintain records and accounts of all costs, expenses and disbursements and provide the same to either of the Joint Appointors upon its request.

(5)  The balance of the Funds (if any) remaining in the hands of the Administrator after making the Distribution (including the balance of the Compensation which remains unclaimed after the expiry of 28 days from the last date for the Administrator to implement the Distribution as set out in (3)(iii) above or such other times as may be agreed by the parties or approved by the Court) and the payment of costs, expenses and disbursements in (4) above shall be paid by the Administrator to the 1^st Respondent.

(6)  The Respondents shall take all necessary steps (and if so required by the Administrator, the 1^st Respondent shall provide any necessary power of attorney) to assist and facilitate the Administrator in the performance of his duties and the exercise of his powers in relation to the purposes referred to in paragraph 1 above.

Appendix 1–Particulars of Circular Fund Flow 1

Appendix 2 – Particulars of Circular Fund Flow 2

The particulars of the loan drawdowns and repayments from and to Gold Smart are as follows:

Appendix3–Particulars of Circular Fund Flow 3

Appendix 4 – Particulars of Circular Fund Flow 4

Appendix 5 – Particulars of Circular Fund Flow 5

Appendix 6 – Particulars of the Combest Loans referred to in paragraph 38 of the Carecraft Schedule that Formed Part o fthe Circular Fund Flows

Appendix 7 – List of Persons controlled by, associated with, or related to Dino Ng involved with the Circular Fund Flows and Combest Loans