Securities and Futures Commission v. Sin Kwok Lam and Others

HCMP 2106/2023

[2025] HKCFI 2831

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2106 OF 2023

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BETWEEN

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REASONS FOR DECISION

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Introduction

1.By a petition dated 13 November 2023, the Securities and Futures Commission (“SFC”)  commenced these proceedings under section 214 of the Securities and Futures Ordinance (Cap. 571)  (“SFO”)  seeking, inter alia, disqualification orders against the 1^st to 6^th Respondents in respect of the affairs of the 7^th Respondent, First Credit Finance Group Limited (“Company”).

2.The SFC and the 4^th Respondent have agreed to dispose of these proceedings by way of the Carecraft procedure[1] based on a Statement of Agreed Facts (“Statement”), which I have appended to these Reasons for Decision. The Statement contains an outline of the material facts, the SFC’s case against the 4^th Respondent, and the agreed proposed orders.

3.In gist, the 4^th Respondent has agreed that, based on the facts set out in the Statement, the business or affairs of the Company have been conducted in a manner described in sections 214(1)(b)  and (c) of the SFO and that she should be disqualified under section 214(2)(d) of the SFO for a period of 7 years[2].

Factual Background

4.The relevant facts have been set out comprehensively in the Statement.  It is only necessary for the Court to provide an overview here.

5.The Company was incorporated in the Cayman Islands. On 5 February 2015, it was deregistered in the Cayman Islands and duly continued in Bermuda as an exempted company.  Its shares have been listed on the Growth Enterprise Market (“GEM”)  of the Stock Exchange of Hong Kong Limited (“SEHK”)  since 13 December 2011[3].

6.At all material times, the Company was an investment holding company.  The Company and its subsidiaries (“Group”)  were principally engaged in the money lending business[4].

7.The 4^th Respondent was part of the Company’s board of directors (“Board”).  As an executive director (“ED”)  and compliance officer of the Company, the 4^th Respondent was responsible for supervising the administrative, human resources, and accounting matters of the Group and managing the Group’s administrative operations[5].

8.The Board also included the following EDs, namely the 1^st, 2^nd and 3^rd Respondents; and one independent non-executive director, the 5^th Respondent[6].

9.The 6^th Respondent was a de facto director of the Company[7].

First Rights Issue Attempt

10.On 18 September 2015, the Company announced, inter alia, that it proposed to raise funds by way of a rights issue (“First Rights Issue”)  [8].  As a result, a special general meeting was held on 10 December 2015 for independent shareholders to vote on the resolution to approve the First Rights Issue. However, the resolution relating to the First Rights Issue was not passed and therefore the First Rights Issue did not proceed[9].

Placing

11.On 17 December 2015, the Company announced two fundraising exercises (“17.12.2015 Announcement”).  The first one concerned the placement of the Company’s shares.  The Company had agreed with Jun Yang Securities Company Limited (“Jun Yang Securities”)  that the latter be appointed as the placing agent to procure, on a best endeavours basis, the placing of up to 60,480,000 new ordinary shares to be allotted and issued to not less than six placees (“Placing”).  The placees (and their ultimate beneficial owners)  were to be persons independent of and not connected with the Company and its connected persons[10].

12.The Placing was completed on 8 January 2016.  As announced by the Company (“Placing Completion Announcement”), an aggregate of 60,480,000 shares were allocated and placed to six placees (“Placees”)  at HK$0.174 per Placing share.  The net proceeds from the Placing were approximately HK$10.12 million[11].

13.Notably, the Placing Completion Announcement also stated that[12]:

“To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, (i)  each of the Placees and where appropriate, their respective ultimate beneficial owners, is an Independent Third Party[13]…”

14.The 6^th Respondent, as one of the Placees, was allotted 6,000,000 Placing shares[14].

Second Rights Issue

15.The second fundraising exercise under the 17.12.2015 Announcement concerned a rights issue.  The Company proposed to raise funds in the range between HK$345,643,200 and HK$414,771,840 (before expenses)  by issuing not less than 2,721,600,000 and not more than 3,265,920,000 new shares at the subscription price of HK$0.127 per new share, based on the allotment of nine rights shares for each share held by Qualifying Shareholders[15] (“Second Rights Issue”)  [16].

16.Pursuant to an underwriting agreement (“Underwriting Agreement”), the Second Rights Issue would be fully underwritten by three underwriters: (1)  Best Year Enterprises Limited (“Best Year”), a company wholly owned by the 1^st Respondent; (2)  Astrum Capital Management Limited (“Astrum”); and (3)  Jun Yang Securities[17].

17.On 29 January 2016, the Company published a circular for the Second Rights Issue (“Second Rights Issue Circular”), which stated, inter alia, that[18]:

“The [Second] Rights Issue was announced shortly after the [First] Rights Issue was voted down by the Independent Shareholders as the Board considers that there is an urgent funding need of the Group in consideration of (i)  the need for the Group to reduce reliance on borrowings from banks due to the Macro-prudential Measures, the details of which are set out in the section ‘Reasons for the Rights Issue and Use of Proceeds’ below; (ii)  the limited cash on hand of the Group of approximately HK$13 million as at 17 December 2015; (iii)  the consistent growth of loan receivables of the Group in recent years; and (iv)  the expected growth in demand for property mortgage loans as further elaborated in the section headed ‘Reasons for the Rights Issue and Use of Proceeds’ below.”

18.On 19 February 2016, the Company announced that, at the special general meeting held on the same day, the Underwriting Agreement and the Second Rights Issue were approved by independent shareholders[19].

19.On 30 March 2016, the Company announced the results of the Second Rights Issue (“Second Rights Issue Announcement”), which stated, inter alia, that:

(1)  The Second Rights Issue was under-subscribed by 1,870,212,111 rights shares, representing about 57.26% of the total available new shares under the Rights Issue.  These untaken shares were allocated in accordance with the Underwriting Agreement. In the end, Best Year (owned by the 1^st Respondent)  subscribed for 427,296,000 untaken shares and Astrum procured subscribers to subscribe for 1,442,916,111 untaken shares[20].

(2)  Astrum confirmed that all subscribers procured by it were independent third parties of the Company[21].

20.It subsequently transpired that the subscribers procured by Astrum included the 6^th Respondent and his elder brother, Cho Kwai Yee Kevin (“Kevin”), and each of them subscribed for 157,480,000 untaken shares[22].  Given the 6^th Respondent’s de facto directorship, the 6^th Respondent and Kevin were in fact connected persons of the Company.

Section 214 of the SFO

21.The principles applicable to the Carecraft procedure have most recently been summarised in SFC v Superb Summit Holdings Limited[23]at [27].  For present purposes, it suffices for this Court to highlight the following:

(1)  Three conditions must be satisfied before relief under section 214(1) of the SFO can be granted, namely (1)  the corporation in question is or was a listed corporation, (2)  the business or affairs complained of are 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.

(2)  In respect of the third condition, the meaning of “misfeasance or other misconduct” under section 214(1)(b) of the SFO is defined as follows:

(a)  “Misfeasance” refers to “the performance of an otherwise lawful act in a wrongful manner” [24].

(b)  “Other misconduct” connote improper or wrong behaviour or mismanagement, or culpable neglect of duties. These words are included to cover the widest range of possible misconduct and is likely to be a “belt and braces” catch-all.

(3)  As for section 214(1)(c) of the SFO (i.e. 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.

22.On the basis of the agreed facts set out in the Statement, I am satisfied that the conditions for granting relief under section 214(2) of the SFO are met.

23.The first condition is satisfied since the Company has been listed on the GEM of the SEHK since 13 December 2011[25].

24.The second condition is satisfied since the matters complained of by the SFC and summarised from [5] to [20] above concern the corporate governance of the Company, which falls within the scope of the Company’s business and affairs.

25.In respect of the third condition, I am of the view that the conduct complained of falls within sections 214(1)(b)  and/or (c) of the SFO:

(1)  First, based on the agreed facts set out in the Statement, it appears that the 6^th Respondent was a de facto director of the Company:

(a)  A majority of the EDs, namely the 2^nd, 3^rd and 4^th Respondents, were required to attend regular or monthly meetings with the 6^th Respondent at his office to report on and discuss with him the business and affairs of the Company. Such meetings took place at least up to June 2017[26].

(b)  The 6^th Respondent made the decision that the Company should sign an agreement with PR Asia Consultants Limited, a public relations company, and the 2^nd and 3^rd Respondents followed his instruction[27].

(c)  The 6^th Respondent took part in the management of the Company’s money lending business, which involved, inter alia, (i)  approving loans, (ii)  monitoring the recovery of outstanding loans, and (iii)  formulating property mortgage strategies[28]. The 2^nd and/or 3^rd Respondents would seek the 6^th Respondent’s approval or instructions on the said matters, which should have been within the purview of the Board[29].

(d)  At a regular meeting, the 2^nd and/or 3^rd Respondents had to ask the 6^th Respondent whether the Company should declare an interim dividend for the first quarter of 2017.  Yet, the power and discretion to pay interim dividends to members of the Company are vested in the Board pursuant to Article 136 of the Company’s Bye-Laws[30].

(e)  The above matters demonstrate that the 6^th Respondent took part in the management of the Company’s business by making directorial decisions.

(2)  Despite the 6^th Respondent’s de facto directorship in the Company since December 2015, the Company failed to publish any announcement informing the shareholders about his de facto directorship, resulting in its members not having been given all the information with respect to its business or affairs that they might reasonably expect[31].

(3)  Second, in approving the Placing on 17 December 2015, the Board failed to consider the dilution impact of the Placing on the Company’s shareholders, resulting in the Company’s net asset value per share to suffer an immediate dilution of approximately 14.9%[32].

(4)  Third, the contents of the Placing Completion Announcement were false and/or misleading as the 6^th Respondent, being a connected person of the Company[33], was not an independent third party[34].

(5)  Fourth, the contents of the Second Rights Issue Announcement were false and/or misleading as the 6^th Respondent and Kevin, who were two of the subscribers of the untaken shares, were not independent third parties of the Company[35].

Disqualification Orders

26.The relevant principles which guide the Court’s determination of the appropriate period of disqualification are also summarised in SFC v Superb Summit Holdings Limited[36]:

(1)  The power to determine the appropriate period of disqualification is a discretionary power.  It will be necessary for the Court to be satisfied that the director’s involvement in the relevant matter involves a sufficiently serious failure to satisfy his duties that some period of disqualification is justified and fair;

(2)  The objectives of a disqualification order are twofold: (a)  to protect the public; and (b)  as a general deterrence.  The former is recognised to be the primary purpose.  It is of the greatest importance that any individual who undertakes the statutory and fiduciary obligations of being a company director should realise that these are personal responsibilities;

(3)  In deciding whether to make a disqualification order, the Court adopts a broad-brush approach.  Earlier decided cases are of limited assistance in the exercise of the Court’s discretion;

(4)  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 described in section 214(1)(a), (b), (c)  or (d) of the SFO and, if so satisfied, determine the scope and duration of the disqualification order;

(5)  The Court is not bound by the agreement reached by the parties. However, in practice, the Court is likely to be guided by the agreement that the SFC, as a responsible regulator, has reached;

(6)  The period of disqualification must reflect the gravity of the offence. The period of disqualification may be fixed by starting with an assessment of the correct period to fit the gravity of the conduct, and a discount is then given for mitigating factors;

(7)  Generally speaking, the Court has divided the maximum period of disqualification of 15 years into three brackets, though these are only guides and not straitjackets:

(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 so 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; and

(8)  The Court will have regard to a wide range of considerations, including the age, state of health and character of the offender, the nature of the breaches, the honesty and competence of the offender, the length of time he has been in jeopardy, whether he appreciates and/or admits the breaches, his general conduct before and after the offence, the periods of disqualification of his co-directors that may have been ordered by other courts, and the interest of shareholders, creditors and employees.

27.Mr Norman Nip SC[37], counsel for the SFC, submits that the SFC’s case against the 4^th Respondent involves a breach of fiduciary duties, failure to exercise skill, care and diligence, as well as negligence and recklessness:

(1)  First, despite being aware of the 6^th Respondent’s de facto directorship, the 4^th Respondent failed to cause the Company to publish any announcement disclosing the same[38].

(2)  Second, in approving the Placing on 17 December 2015, the 4^th Respondent simply followed the 1^st Respondent’s instructions in approving the Placing without properly knowing its terms[39].  The Board, including the 4^th Respondent, failed to consider the dilution impact of the Placing on the Company’s shareholders, resulting in the Company’s net asset value per share to suffer an immediate dilution of approximately 14.9% after Placing[40].

(3)  Third, in view of the 6^th Respondent’s de facto directorship, the 4^th Respondent knew or ought to have known that the contents of the Placing Completion Announcement, in particular the independence of the Placees, were false and/or misleading[41].  She ought to have made reasonable enquiries to determine or verify the independence of the Placees, yet she merely relied on the 2^nd and 3^rd Respondents to make the necessary enquiries and judgment[42].

(4)  Fourth, in light of the 6^th Respondent’s de facto directorship and Kevin being an associate[43] of the 6^th Respondent, the 4^th Respondent knew or ought to have known that they were not independent third parties of the Company.  Despite so, the 4^th Respondent did not verify the information provided by Astrum and recklessly made or allowed the Company to make a false and/or misleading statement in relation to the independence of the subscribers of the untaken shares in the Second Rights Issue Announcement[44].

28.A number of mitigating factors have been agreed between the SFC and the 4^th Respondent:

(1)  The 4^th Respondent has been cooperative with the SFC in these proceedings and accepts liability[45];

(2)  The 4^th Respondent has saved time and costs of both the SFC and the Court by agreeing to adopt the Carecraft procedure[46];

(3)  The 4^th Respondent has agreed to pay her share of the SFC’s costs[47];

(4)  The 4^th Respondent has agreed to give evidence against the 1^st to 3^rd Respondents, the 5^th Respondent and/or the 6^th Respondents if so required[48];

(5)  The 4^th Respondent resigned as an ED of the Company on 22 September 2017 and left her employment with the Company in October 2017[49];

(6)  The 4^th Respondent has faced various hardships in recent years, including undergoing three major surgeries in 2023 and being unemployed for about 3.5 years.  Upon the making of the disqualification order, she may be required to resign from her current role as the manager of a department in a financial institution and is unlikely to find a similar role in the finance industry for (at least)  the proposed disqualification period.  She would also lose the medical insurance coverage provided by her current employer upon resignation[50]; and

(7)  The 4^th Respondent has demonstrated real remorse for her failings[51].

29.In light of the matters complained of and the agreed mitigating factors, Mr Nip submits that the gravity of the 4^th Respondent’s conduct warrants a disqualification period of 7 years.

30.Ms Queenie Lau SC, counsel for the 4^th Respondent, agrees that a disqualification period of 7 years is appropriate.  Apart from the agreed mitigating factors set out in [28] above, she also emphasised that there is no dishonesty or illicit gain in respect of the 4^th Respondent’s conduct and that the 4^th Respondent has no history of previous disqualifications.

31.Having taken into account all relevant circumstances, I accept that the conduct of the 4^th Respondent falls within the lower end of the middle bracket.  A disqualification period of 7 years is, therefore, appropriate.

32.For these reasons, I made an order in terms of the draft order produced to this Court subject to minor amendments discussed with counsel at the hearing.

Mr Norman Nip SC and Mr Roger Phang, instructed by Securities and Futures Commission, for the Petitioner

Ms Queenie Lau SC, instructed by Reynolds Porter Chamberlain, for the 4^th Respondent

STATEMENT OF AGREED FACTS FOR CARECRAFT PROCEDURE BETWEEN THE PETITIONER AND THE 4^TH RESPONDENT

A.  INTRODUCTION

1.  On 13 November 2023, the Securities and Futures Commission (“Petitioner”)  presented a Petition under section 214 of the Securities and Futures Ordinance (Cap. 571)  (“Ordinance”)  seeking, amongst other things:

1.1  A disqualification order, pursuant to section 214(2)(d)  of the Ordinance, against each of the 1^st to 6^th Respondents that each of them shall not, for such period as the Court might determine, without leave of the Court:

(a)  be, or continue to be, a director, liquidator, receiver or manager of the property or business of any listed or unlisted corporation in Hong Kong, including First Credit Finance Group Limited (“Company”)  or any of its subsidiaries and affiliates; and

(b)  in any way, directly or indirectly, be concerned, or take part, in the management of any listed or unlisted corporation in Hong Kong, including the Company or any of its subsidiaries and affiliates.

1.2  An order that the 7^th Respondent shall publish the findings of the Court in these proceedings.

2.  Subject to the approval of this Court, the Petitioner and the 4^th Respondent, Ms Ho Siu Man (“HO”), consent to the disposal of these proceedings against HO by way of the summary procedure (“Carecraft Procedure”)  sanctioned in Re Carecraft Construction Co Ltd [1994] 1 WLR 172, as clarified by the English Court of Appeal in Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569 and as adopted by this Court in a number of cases in respect of proceedings under section 214 of the Ordinance.

3.  This Statement sets out the material facts relied upon by the Petitioner in these proceedings that are not disputed by HO, for the disposal of these proceedings against HO by way of the Carecraft Procedure.

4.  Solely for the purposes of resolving these proceedings by way of the Carecraft Procedure, and by reference to the facts set out in Section B below (which HO admits and accepts), HO accepts that during the relevant period, the business and affairs of the Company have been conducted in a manner:

4.1  involving misfeasance or other misconduct towards it or its members or any part of its members under section 214(1)(b)  of the Ordinance; and

4.2  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 under section 214(1)(c)  of the Ordinance.

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 HO agree and submit that it would be appropriate for a disqualification order to be made against HO under section 214(2)(d)  of the Ordinance that, for a period of  seven (7)  years, she shall not, without the leave of the Court:

5.1  be, or continue to be, a director, liquidator, receiver or manager of the property or business of any listed or unlisted corporation in Hong Kong, including the Company or any of its subsidiaries and affiliates; and

5.2  in any way, directly or indirectly, be concerned, or take part, in the management of any listed or unlisted corporation in Hong Kong, including the Company or any of its subsidiaries and affiliates.

6.  HO agrees to pay the Petitioner’s costs in these proceedings, or such portion thereof as the Court thinks appropriate, to be taxed if not agreed with certificate for Counsel.

7.  In the event of a disqualification order made against HO by reference to this Statement:

7.1  the Petitioner and HO agree that they will jointly apply to this Court for a direction that this Statement be annexed to a judgment of this Court; and

7.2  without prejudice to all of the Petitioner’s rights, the Petitioner specifically reserves the right to:

(a)  refer to this Statement for all purposes connected with or ancillary to these proceedings or other proceedings against other directors of the Company at the material time; and

(b)  disclose this Statement to third parties where it appears proper to do so in the public interest, including, but not limited to, making use of this Statement for the purpose of any press release issued in respect of these proceedings.

8.  HO has adopted a reasonable course of action to conclude these proceedings by way of the Carecraft Procedure which saves the time and costs of the Petitioner and the Court.  HO has also agreed to assist the Petitioner by agreeing to give evidence in these proceedings against the 1^st, 2^nd, 3^rd, 5^th and/or 6^th Respondents, if so required.

9.  The Petitioner and HO agree that in the event this Court for whatever reason is of the view that these proceedings shall not be dealt with by the Court by way of the Carecraft Procedure or that a full hearing is appropriate, no admission or concession by either the Petitioner or HO nor any proposal for disqualification or the period of disqualification herein referred to or liability to pay costs 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.  FACTS NOT IN DISPUTE

10.  The structure of Section B of this Statement is as follows:

10.1  Section B1 sets out the background information relating to the Company and its management.

10.2  Sections B2 to B7 set out the facts relied on by the Petitioner in support of its case that the business and affairs of the Company have been conducted in such manner as described in sections 214(1)(b)  and (c)  of the Ordinance.

10.3  Sections B8 and B9 set out the duties owed by HO to the Company and the facts relied upon by the Petitioner in support of its case that HO was in breach of her duties and had caused, allowed and permitted the business and affairs of the Company to have been conducted in the manner aforesaid.

B1.  THE COMPANY

11.  The Company was incorporated in the Cayman Islands.  On 5 February 2015, the Company was deregistered in the Cayman Islands and duly continued in Bermuda as an exempted company.  Its shares have been listed on the Growth Enterprise Market (“GEM”)  of the Stock Exchange of Hong Kong Limited since 13 December 2011.

12.  At all material times:

12.1  The Company was an investment holding company.  The Company and its subsidiaries (“Group”)  were principally engaged in the money lending business; and

12.2  The board of directors (“Board”)  of the Company included the following persons who were in charge of the Company’s business or affairs:

(a)  The 1^st Respondent, Mr. Sin Kwok Lam (“SIN”), who was an executive director (“ED”)  and the Chairman of the Board and founder of the Group.  He was responsible for overseeing the operation, formulating market strategies and ensuring the loan quality of the Group.  He was also the chairman and non-executive director of National Arts Group Holdings Limited , the shares of which were listed on GEM (stock code: 8228).

(b)  The 2^nd Respondent, Mr. Tsang Yan Kwong (“TSANG”), who was an ED and the Chief Executive Officer of the Company.  He was responsible for supervising the overall operation and management of the Group.

(c)  The 3^rd Respondent, Mr. Leung Wai Hung (“LEUNG”), who was an ED and the company secretary of the Company.  He was responsible for the operation of the Group, especially overseeing the loan approval, collection matters and company secretarial matters of the Company.

(d)  HO, who was an ED and the compliance officer of the Company.  She was responsible for supervising the administrative, human resources and accounting matters of the Group and managing the Group’s administrative operations.

(e)  The 5^th Respondent, Mr. Tai Man Hin Tony, who was an independent non-executive director.

12.3  The 6^th Respondent, Dr. Cho Kwai Chee (“CHO”), was a de facto director of the Company (see Section B3 below).

12.4  The following persons also held major positions at the Group:

(a)  Ms. Chan Mang Lee Mandy (“Mandy Chan”), a member of the senior management who was the Manager of the Loans Department of First Credit Limited (“FCL”), an indirect wholly-owned subsidiary of the Company, and a company secretarial officer of the Company. She was responsible for assisting in the general operations of the Group, including loans and compliance matters, and the company secretarial matters of the Company.  She reported to LEUNG.

(b)  Ms. Yung Tsz Ting Peggy, the Assistant Manager of the Loans Department of FCL.  She was responsible for assisting branch operations and she reported to Mandy Chan.

(c)  Mr. Chan Sung Shing Denis, the Credit Controller of the Company who joined in January 2016.  He was responsible for the revision of the credit files to ensure that they were in line with the Company’s credit policy and legal requirements, as well as the upgrade process of the Company’s loan system.

B2.  BACKGROUND

The First Rights Issue

13.  On 18 September 2015, the Company published an announcement (“18.9.2015 Announcement”)  announcing, inter alia, that it proposed to:

13.1  implement a consolidation (“Share Consolidation”)  of every two existing ordinary shares into one ordinary share of the Company (“Consolidated Share”); and

13.2  raise approximately HK$631.4 million before expenses by issuing 3,628,800,000 rights shares at the subscription price of HK$0.174 per rights share on the basis of twelve rights shares for each one Consolidated Share (“First Rights Issue”).

14.  It was also stated in the 18.9.2015 Announcement that:

“In view of the recent ‘Macroprudential requirements for mortgage financing’ issued by the Hong Kong Monetary Authority on 2 March 2015 in relation to the provision of lending by banks to money lenders, the Group’s credit relationship with banks is subject to increased uncertainties. As a result, the Company considers it necessary to raise funds from the [First] Rights Issue and it intends to apply the net proceeds from the [First] Rights Issue mainly in providing secured lending depending on the market situation in expansion of the Group’s loan portfolio.”

15.  On 10 December 2015, the Company announced that, at the special general meeting held on the same day:

15.1  the resolution relating to the Share Consolidation was passed; and

15.2  the resolution relating to the First Rights Issue was not passed.

The Placing

16.  On 17 December 2015, the Company published another announcement (“17.12.2015 Announcement”)  announcing that:

16.1  The Company had entered into an agreement with Jun Yang Securities Company Limited (“Jun Yang Securities”)  as the placing agent to procure, on a best endeavour basis, the placing of up to 60,480,000 new ordinary shares to be allotted and issued to not less than six placees (“Placing”), who and whose ultimate beneficial owners shall be persons independent of and not connected with the Company and connected persons of the Company.

16.2  The Company proposed to raise not less than HK$345,643,200 to not more than HK$414,771,840 (before expenses)  by issuing not less than 2,721,600,000 and not more than 3,265,920,000 rights shares at the subscription price of HK$0.127 per rights share, on the basis of nine rights shares for every one share held by the Qualifying Shareholders (as defined in the 17.12.2015 Announcement)  (“Second Rights Issue”).

17.  It was also stated in the 17.12.2015 Announcement, inter alia, that:

17.1  The Company entered into an underwriting agreement (“Underwriting Agreement”)  with three underwriters (“Underwriters”): (1)  Best Year Enterprises Limited (“Best Year”), a company wholly owned by SIN; (2)  Astrum Capital Management Limited (“Astrum”); and (3)  Jun Yang Securities.  Pursuant to the Underwriting Agreement, the Second Rights Issue would be fully underwritten by the Underwriters.

17.2  The Board expected that there would be an increase in housing supply in the next few years which would lead to a substantial increase in demand for private housing secured lending. To capture the business opportunities arising from this trend and ensure that the Group has sufficient funds to satisfy the expanding market, the management of the Company considered that there was a need for fund raising.

17.3  The Board was of the view that the Placing represented a good opportunity to broaden the shareholders’ base and the capital base of the Company and was therefore in the interest of the Company and the shareholders as a whole.

18.  On 8 January 2016, the Company announced that the Placing was completed (“Placing Completion Announcement”)  and an aggregate of 60,480,000 shares were allocated and placed to six placees (“Placees”)  at the Placing price of HK$0.174 per Placing share. The net proceeds from the Placing were approximately HK$10.12 million.

19.  It was also stated in the Placing Completion Announcement that:

“To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, (i)  each of the Placees and where appropriate, their respective ultimate beneficial owners, is an Independent Third Party; and (ii)  none of the Placees has become a substantial shareholder of the Company upon completion of the Placing.”

20.  However, the Placees of the Placing included CHO, who subscribed for 6,000,000 Placing shares.

The Second Rights Issue

21.  On 29 January 2016, the Company published a circular for the Second Rights Issue (“Second Rights Issue Circular”).  The Second Rights Issue Circular stated, inter alia, that:

“The [Second] Rights Issue was announced shortly after the [First] Rights Issue was voted down by the Independent Shareholders as the Board considers that there is an urgent funding need of the Group in consideration of (i)  the need for the Group to reduce reliance on borrowings from banks due to the Macro-prudential Measures, the details of which are set out in the section ‘Reasons for the Rights Issue and Use of Proceeds’ below; (ii)  the limited cash on hand of the Group of approximately HK$13 million as at 17 December 2015; (iii)  the consistent growth of loan receivables of the Group in recent years; and (iv)  the expected growth in demand for property mortgage loans as further elaborated in the section headed ‘Reasons for the Rights Issue and Use of Proceeds’ below.”

22.  On 19 February 2016, the Company announced that, at the special general meeting held on the same day, the Underwriting Agreement and the Second Rights Issue were approved by the shareholders.

23.  On 30 March 2016, the Company published an announcement in relation to the results of the Second Rights Issue (“Second Rights Issue Announcement”).   The Second Rights Issue Announcement stated, inter alia, that:

23.1  The Second Rights Issue was under-subscribed by 1,870,212,111 rights shares, representing about 57.26% of the total number of rights shares available for subscription under the Rights Issue, which were allocated in accordance with the Underwriting Agreement.  As a result, Best Year / SIN subscribed for 427,296,000 untaken shares and Astrum procured subscribers to subscribe for 1,442,916,111 untaken shares.

23.2  As confirmed by Astrum, all subscribers procured by it were independent third parties of the Company.

24.  However, the subscribers of the untaken shares from the Second Rights Issue included CHO and CHO’s elder brother, Cho Kwai Yee Kevin (“CHO’s Brother”), each of whom subscribed for 157,480,000 untaken shares.

B3.  CHO’S DE FACTO DIRECTORSHIP IN THE COMPANY

Directors’ powers under the Company’s corporate governing structure

25.  At the material times, the Company’s Memorandum of Continuance and Amended and Restated Bye-Laws (“Bye-Laws”)  contained the following relevant articles:

25.1  Article 83(2): “The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the Board… Any Director appointed by the Board to fill a casual vacancy shall hold office until the first general meeting of Members after his appointment and be subject to re-election at such meeting and any Director appointed by the Board as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election.”

25.2  Article 101(1): “The business of the Company shall be managed and conducted by the Board, which… may exercise all powers of the Company (whether relating to the management of the business of the Company or otherwise)  which are not by the Statutes or by these Bye-laws required to be exercised by the Company in general meeting, subject nevertheless to the provisions of the Statutes and of these Bye-laws and to such regulations being not inconsistent with such provisions, as may be prescribed by the Company in general meeting, but no regulations made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if such regulations had not been made.  The general powers given by this Bye-law shall not be limited or restricted by any special authority or power given to the Board by any other Bye-law.”

25.3  Article 136: “The Board may from time to time pay to the Members such interim dividends as appear to the Board to be justified by the profits of the Company …”

CHO assumed the role of a director of the Company

26.  CHO assumed the role of a director of the Company between December 2015 and June 2017 by taking part in the management of the Company’s business or affairs and making decisions of a directorial nature.

Particulars

26.1  A majority of the EDs were required to attend regular or monthly meetings with CHO to report on and discuss the business and affairs of the Company

26.1.1  HO was introduced to CHO on 5 October 2015. TSANG, LEUNG and HO, three of the four EDs of the Company, were required to have regular or monthly meetings with CHO at his office to report on and discuss with him the business and affairs of the Company, which meetings took place at least up to June 2017.

26.1.2  TSANG and LEUNG had dedicated mobile phones which were used to exclusively communicate with CHO on matters relating to the Company.

26.1.3  HO had a mobile phone provided by the Company, which she used for various work purposes or as instructed by SIN, including for communicating with CHO.

26.1.4  CHO made the decision that the Company should sign an agreement with PR Asia Consultants Limited, a public relations company, and TSANG and LEUNG followed his instruction.

26.2  CHO took part in the management of the Company’s business

26.2.1  Article 101(1)  of the Bye-Laws provides that the business of the Company shall be managed and conducted by the Board.

26.2.2  As part of the Group’s money lending business, the Board would have to, inter alia:

(a)  Approve loans;

(b)  Monitor the recovery of outstanding loans;

(c)  Formulate property mortgage strategies; and

(d)  Consider means to expand business, including by acquiring additional subsidiaries.

26.2.3  TSANG and/or LEUNG would discuss with CHO about the Company’s loans and seek his approval for the Company to make loans.

26.2.4  TSANG would also discuss with CHO about, and seek his approval on, the Company’s loan recovery process.

26.2.5  Further, TSANG and/or LEUNG sought CHO’s instructions on the Company’s new property mortgage strategy in the regular meetings with CHO.

26.2.6  HO overheard these discussions during the regular meetings but was not personally involved in these aspects of the discussions as she was not responsible for or involved in the loan approval or recovery processes, or the property mortgage strategy of the Company.

26.3  CHO was asked whether the Company should declare an interim dividend for the first quarter of 2017

26.3.1  The power and discretion to pay interim dividends to members of the Company is vested in the Board pursuant to Article 136 of the Bye-Laws.

26.3.2  At a regular meeting with CHO, TSANG and/or LEUNG had to ask CHO whether the Company should declare an interim dividend for the first quarter of 2017.

B4.  FAILURE TO DISCLOSE CHO’S DE FACTO DIRECTORSHIP

27.  GEM Listing Rules 17.50(2)  requires a listed issuer to publish an announcement as soon as practicable in regard to any changes in its directorate.

28.  By reason of the matters in Section B3 above, since December 2015, CHO had already become involved in making directorial decisions of the Company and was a de facto director of the Company.

29.  Although the Company ought to have published an announcement as soon as practicable thereafter to inform the shareholders about the change in its directorate, no announcements of the Company between December 2015 and June 2017 disclosed or mentioned that CHO was a director of the Company. 

30.  As a result, the Company’s business or affairs have been conducted in a manner described in section 214(1)(c)  of the Ordinance, i.e. resulting in its members not having been given all the information with respect to its business or affairs that they might reasonably expect.  Further, as HO ought to have been aware of CHO’s de facto directorship in the Company but failed to cause the Company to disclose or mention the same in any announcement, she had caused, allowed and permitted the Company’s business or affairs to have been conducted in a manner described in section 214(1)(b)  of the Ordinance, i.e. involving misfeasance or other misconduct.

B5.  FAILURE TO TAKE INTO ACCOUNT OF THE DILUTION IMPACT OF THE PLACING

31.  After the completion of the Placing, the Company’s net asset value (“NAV”)  per share suffered an immediate dilution of approximately 14.9%.

Particulars

31.1  As at 30 June 2015, the Company’s theoretical unaudited consolidated NAV per share was HK$1.534, and its total equity was HK$463,452,007.

31.2  The Placing price of HK$0.174 represented a discount of 88.66% (i.e. (HK$1.534 – HK$0.174)  / HK$1.534)  to the Company’s NAV per share.

31.3  Assuming that the Placing was completed on 30 June 2015 and that the net proceeds of the Placing was HK$10.12 million as disclosed in the 17.12.2015 Announcement, the NAV per share would be about HK$1.305 (i.e. (HK$463,452,007 + HK$10,120,000)  / (302,400,000 shares (i.e. total issued shares as at 17 December 2015)  + 60,480,000 shares (i.e. maximum number of Placing shares to be issued)).  Accordingly, the NAV per share was diluted by approximately 14.9% (i.e. (HK$1.534 – HK$1.305)  / HK$1.534)  after the completion of the Placing.

32.  The Board of the Company, including HO, had an obligation of a fiduciary nature to have regard to the interests of shareholders when deciding whether and in what manner to embark on an issue of new shares, and to exercise the power (if it is decided to do so)  in a way that is fair as between different groups of shareholders.

33.  In approving the Placing on 17 December 2015, the Board failed to and did not consider the dilution impact of the Placing on the Company’s shareholders.

Particulars

33.1  In the Board minutes dated 17 December 2015, there was no mention of the financial impact of the Placing on the Company and its shareholders in terms of the dilution of the NAV per share.

33.2  The documents which were tabled before the Board did not include any financial analysis.

34.  As a result, the Company’s business or affairs have been conducted in a manner described in section 214(1)(b)  of the Ordinance, i.e. involving misfeasance or other misconduct.

B6.  PUBLISHING FALSE OR MISLEADING INFORMATION IN THE PLACING COMPLETION ANNOUNCEMENT

35.  Prior to the issuance of the Placing Completion Announcement on 8 January 2016, the Company received the list of Placees on 5 January 2016 from Jun Yang Securities (“List of Placees”).

36.  Contrary to the statement in the Placing Completion Announcement that “[t]o the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, (i)  each of the Placees and where appropriate, their respective ultimate beneficial owners, is an Independent Third Party”, CHO, who was one of the Placees, was a de facto director of the Company between December 2015 and June 2017.

37.  Pursuant to GEM Listing Rules 20.07, CHO was a connected person of the Company at the time of the issuance of the Placing Completion Announcement and was thus not an “Independent Third Party” (as defined in the 17.12.2015 Announcement to mean “person(s)  independent of and not connected with the Company and connected persons of the Company”.

38.  In view of CHO’s de facto directorship in the Company, the following rules and requirements were applicable and the Company ought to have complied with them:

38.1  Note 1 to GEM Listing Rules 10.12: The names of certain placees have to be identified in the results announcement, including directors on an individually named basis.

38.2  GEM Listing Rules 20.33: The Company must announce the fact that CHO was a placee in the Placing and a subscriber of the untaken shares of the Second Rights Issue as soon as practicable after the terms of the Placing and the Second Rights Issue have been agreed since the transactions are connected transactions pursuant to GEM Listing Rules 20.22(6)  and CHO is a connected person of the Company.

38.3  GEM Listing Rules 20.34: The connected transactions entered into with CHO must be conditional on shareholders’ approval at a general meeting held by the listed issuer.

38.4  GEM Listing Rules 20.44: The Company must send a circular to its shareholders in relation to the connected transactions entered into with CHO.

38.5  GEM Listing Rules 20.47: The Company must disclose the connected transactions entered into with CHO in its annual report.

39.  CHO’s name was not identified in the Placing Completion Announcement as required by Note 1 to GEM Listing Rules 10.12 and none of the other rules above were complied with.

40.  In the premises, the Company was in breach of the GEM Listing Rules and the contents of the Placing Completion Announcement were false and/or misleading.  As a result, the Company’s business or affairs have been conducted in a manner described in section 214(1)(c)  of the Ordinance, i.e. resulting in its members not having been given all the information with respect to its business or affairs that they might reasonably expect.  Further, as HO ought to have been aware of CHO’s de facto directorship in the Company and ought to have known that the statement in relation to the independence of the Placees was false and/or misleading, she had caused, allowed and permitted the Company’s business or affairs to have been conducted in a manner described in section 214(1)(b)  of the Ordinance, i.e. involving misfeasance or other misconduct.

B7.  PUBLISHING FALSE OR MISLEADING INFORMATION IN THE SECOND RIGHTS ISSUE ANNOUNCEMENT

41.  It was stated in the Second Rights Issue Announcement that:

41.1  “[a]s confirmed by Astrum, all subscribers procured by it are independent third parties of the Company”; and

41.2  “[a]s confirmed by Astrum… (2)  each of the subscribers of the Untaken Shares procured by it is a third party independent of, not acting in concert with and not connected with any connected persons of the Company and their respective associates.”

42.  Contrary to the above statements, CHO and CHO’s Brother, who were two of the subscribers of the untaken shares (see paragraph 24 above), were not independent third parties of the Company:

42.1  CHO was a de facto director of the Company between December 2015 and June 2017, and hence a connected person of the Company by virtue of GEM Listing Rules 20.07 and not an independent third party of the Company.

42.2  CHO’s Brother, who was an associate of CHO within the meaning of GEM Listing Rules 20.10(2)(a), was therefore also a connected person of the Company by virtue of GEM Listing Rules 20.07 and not an independent third party of the Company.

43.  In the premises, the Company was in breach of the GEM Listing Rules 20.33, 20.34, 20.44 and 20.47 and the contents of the Second Rights Issue Announcement were false and/or misleading.  As a result, the Company’s business or affairs have been conducted in a manner described in section 214(1)(c)  of the Ordinance, i.e. resulting in its members not having been given all the information with respect to its business or affairs that they might reasonably expect. Further, as HO ought to have been aware of CHO’s de facto directorship in the Company and ought to have known that the statement in relation to the independence of the subscribers was false and/or misleading, she had caused, allowed and permitted the Company’s business or affairs to have been conducted in a manner described in section 214(1)(b)  of the Ordinance, i.e. involving misfeasance or other misconduct.

B8.  DUTIES OWED BY HO TO THE COMPANY

44.  At all material times, HO owed, inter alia, the following duties to the Company as its director:

44.1  A duty to act in good faith and in the best interests of the Company, including a duty to disclose all relevant material information to the Company and the shareholders.

44.2  A duty to exercise reasonable care, skill and diligence in the performance of her duties as a director of the Company.

44.3  A duty to exercise independent judgment in the performance of her duties as director of the Company.

44.4  A duty to comply and procure the Company to comply with, inter alia, the GEM Listing Rules at all times, including but not limited to GEM Listing Rules 17.50(2), 10.12, 20.33, 20.34, 20.44 and 20.47.

45.  At the material times, the GEM Listing Rules provide, amongst other things, that:

45.1  GEM Listing Rules 5.01:

“5.01 The board of directors of an issuer is collectively responsible for its management and operations.  The Exchange expects the directors, both collectively and individually, to fulfil fiduciary duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law.  This means that every director must, in the performance of his duties as a director:-

(1)  act honestly and in good faith in the interests of the company as a whole;

(2)  act for proper purpose;

(3)  be answerable to the issuer for the application or misapplication of its assets;

(4)  avoid actual and potential conflicts of interest and duty;

(5)  disclose fully and fairly his interests in contracts with the issuer; and

(6)  apply such degree of skill, care and diligence as may reasonably be expected of a person of his knowledge and experience and holding his office within the issuer…”

   45.2  GEM Listing Rules 17.03:

“17.03 An issuer’s directors are collectively and individually responsible for ensuring the issuer’s full compliance with the GEM Listing Rules.”

45.3  GEM Listing Rules 17.56:

“17.56 … any announcement, or corporate communication required pursuant to the GEM Listing Rules must be prepared having regard to the following general principles:- …

(2)  the information contained in the document must be accurate and complete in all material respects and not be misleading or deceptive.”

46.  HO also owed the duty stated in paragraph 32 above.

B9.  LIABILITY OF HO UNDER SECTIONS 214(1)  AND (2)  OF THE ORDINANCE

47.  By reason of the matters aforesaid, the business or affairs of the Company have been conducted in a manner as pleaded in paragraph 4 above and HO accepts that she, together with one or more of the 1^st, 2^nd, 3^rd, 5^th and 6^th Respondents had wrongfully caused and was responsible for the business or affairs of the Company having been conducted in the manner pleaded in Section B above.

Failing to disclose CHO’s de facto directorship

48.  HO ought to have been aware of CHO’s de facto directorship in the Company but failed to cause the Company to inform its members of the same:

48.1  HO met and discussed with CHO at the monthly meetings in relation to the affairs of the Company held in CHO’s office (see paragraph 26.1.1 above).

48.2  HO used the mobile phone provided by the Company to, among other things, communicate with CHO on matters relating to the Company.

49.  In the premises, HO admits, accepts and agrees that she was in breach of her duties pleaded in paragraph 44 above.

Failing to take into account of the dilution impact of the Placing

50.  HO signed on the Board minutes dated 17 December 2015 to approve the Placing and ought to have known the terms of the Placing.  However, she simply followed SIN’s instructions in approving the Placing without properly knowing the terms of the Placing.

51.  She admitted in her interview with the Petitioner that it was her duty to consider whether there was a need to conduct the Placing, and if there was, the Board should propose the fund-raising activity and leave it for the shareholders to decide whether to approve the proposal.

52.  When asked what she did to satisfy herself that the Placing was in the best interests of the shareholders, HO considered that it was important for the Company to have sufficient cashflow such that it could lend money and expand its business. To these ends, she considered that “the more money, the better”.

53.  HO admits, accepts and agrees that she considered whether there was a need for the Company to raise funds, but did not sufficiently consider other matters, including the dilution impact.  The adverse impact of the Placing on the Company’s shareholders was a relevant factor which HO ought to have taken into account as the Placing reduced the shareholding percentage of the Company’s shareholders and consequently their future share of the Company’s profits and dividend.

54.  In the premises, HO admits, accepts and agrees that she is responsible for the manner in which the Company conducted the Placing and she was in breach of her duties pleaded in paragraph 32 above.

Publishing false or misleading information in the Placing Completion Announcement

55.  In the Placing Completion Announcement, it was stated that: “This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company.  The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.”

56.  HO was one of the directors who resolved at the Board meeting on 17 December 2015 to authorise any two directors to constitute a committee of the directors to agree on any matter whatsoever in connection with the Placing and, in particular, to do all things and take all steps desirable or necessary in connection with the Placing including approving the form and substance of the Placing Completion Announcement.  However, as the accuracy and completeness of the information contained in the Placing Completion Announcement was a matter to which the Board as a whole must take responsibility, HO ought to have made reasonable enquiries to determine or verify whether each of the Placees and their ultimate beneficial owners was an “Independent Third Party” and/or ought not to have relied on TSANG and LEUNG to make the necessary enquiries and judgment.

57.  HO admits, accepts and agrees that she ought to have been aware of CHO’s de facto directorship in the Company and ought to have had reviewed the List of Placees in order to satisfy herself as to the truth of the statement in paragraph 36 above.  She negligently made, had caused, allowed and permitted the Company to make, a false and/or misleading statement in relation to the independence of the Placees in the Placing Completion Announcement.

58.  In the premises, HO admits, accepts and agrees that was she was in breach of her duties pleaded in paragraph 44 above.

Publishing false or misleading information in the Second Rights Issue Announcement

59.  In the Second Rights Issue Announcement, it was stated that: “This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company.  The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.”

60.  HO was one of the two directors who formed the Board committee with the authorisation to agree on any matter whatsoever in connection with the Second Rights Issue and, in particular, to do all things and take all steps desirable or necessary in connection with the Second Rights Issue including approving the form and substance of the Second Rights Issue Announcement.  In approving the draft of the Second Rights Issue Announcement, HO ought to have verified the information provided by Astrum in order to satisfy herself as to the truth of the statement in paragraph 41 above.

61.  HO admits, accepts and agrees that she ought to have been aware of CHO’s de facto directorship in the Company but resolved to approve the form and substance of the Second Rights Issue Announcement.  She had recklessly made, or had caused, allowed and permitted the Company to make, a false and/or misleading statement in relation to the independence of the subscribers of the untaken shares in the Second Rights Issue Announcement.

62.  In the premises, HO admits, accepts and agrees that she was in breach of her duties pleaded in paragraph 44 above.

C.  AGREED MITIGATING FACTORS

63.  HO has been cooperative in relation to these proceedings with the Petitioner (and the Petitioner’s prior investigation into the affairs of the Company)  and accepts liability.

64.  HO has adopted a reasonable course of action in agreeing to conclude these proceedings by way of the Carecraft Procedure which saves the time and costs of the Petitioner and the Court.  HO has also agreed to pay her share of the Petitioner’s costs in these proceedings and to assist the Petitioner by agreeing to give evidence in these proceedings against the 1^st, 2^nd, 3^rd, 5^th and/or 6^th Respondents, if so required.

65.  Subsequent to the events pleaded in the Petition, HO resigned as an executive director of the Company on 22 September 2017 and left her employment with the Company in October 2017.  In August 2018, HO found her faith in Christ in a church in Hong Kong.  She was subsequently baptized in November 2019.  She remained unemployed for about 3.5 years, until she started working at the church as a Church Executive Secretary handling its administrative and human resources matters from April 2021 to September 2022.  She re-entered the finance industry in October 2022.

66.  HO was diagnosed with a serious gut-related condition in May 2023 and underwent a total of three major surgeries in 2023 together with related post-surgery treatments.  HO continues to receive medical treatment, the costs of which are presently covered by her current employer’s medical insurer.

67.  HO is currently the manager of a department in a financial institution.  HO’s effective monthly salary was sixty-five thousand Hong Kong Dollars before she resigned from the Company in October 2017.  Her salary is materially less in her current role. Additionally, she may be required to resign from her current role on the making of a disqualification order and the publication of the findings of the Court in these proceedings.  She will unlikely be able to find a similar role in the finance industry during (at least)  the proposed disqualification period.  The disqualification order will impose significant financial hardships on HO as: (a)  she will not be able to find a similar role for (at least)  the period of the disqualification order, which is substantial; and (b)  will likely lose her medical insurance coverage provided by her current employer, in which case she will have to bear her own medical costs going forward.

68.  HO has shown real remorse for her failings and is committed to learning from her mistakes and not repeating them in the future.  To further develop her professional knowledge and hone her skills, after leaving the Company, she studied and successfully obtained a master’s degree in professional accounting in 2018.  HO was also praised by her supervisor at the church for her work on reviewing and developing effective accounting policies and internal control procedures, which was highly valued by the church.

D.  PROPOSAL FOR DISQUALIFICATION

69.  On the basis of the facts not in dispute as set out in Section B above and the mitigating factors set out in Section C above, the Petitioner and HO agree that it would be appropriate for a disqualification order to be made against HO under section 214(2)(d)  of the Ordinance that, for a period of seven (7)  years, she shall not, without the leave of the Court:

69.1  be, or continue to be, a director, liquidator, receiver or manager of the property or business of any listed or unlisted corporation in Hong Kong, including the Company or any of its subsidiaries and affiliates; and

69.2  in any way, directly or indirectly, be concerned, or take part, in the management of any listed or unlisted corporation in Hong Kong, including the Company or any of its subsidiaries and affiliates.

70.  HO agrees to pay the Petitioner’s costs in these proceedings, or such portion thereof as the Court thinks appropriate, to be taxed if not agreed with certificate for Counsel.

Dated the   day of February 2025.