Hong Kong

SFC commences disciplinary proceedings against Wonderful Sky Financial Group Holdings Limited and others for alleged breach of the Share Buy-backs Code

The Hong Kong Takeovers Executive has reportedly commenced disciplinary proceedings before the Takeovers and Mergers Panel (Takeovers Panel) against Wonderful Sky Financial Group Holdings Limited, Liu Tianni and Liu Kiki Ching Tung over a breach of the Code on Share Buy-backs (Share Buy-backs Code).

The SFC alleges that in March 2020, Wonderful Sky bought back 42,500,000 shares by way of a block-trade which was pre-arranged and pre-agreed between Wonderful Sky and the vendor. This constituted an off-market share buy-back which required the Takeovers Executive’s approval and the approval of Wonderful Sky’s disinterested shareholders, neither of which was obtained.

Liu Tianni, as the Chairman, Chief Executive Officer and an executive director of Wonderful Sky, was the main decision maker for the buy-back. Liu Kiki Ching Tung was a deputy general manager of Wonderful Sky and had participated extensively in implementing the buy-back.

If the Takeovers Panel finds that there was a breach of the Share Buy-backs Code, it is empowered to issue a range of sanctions including imposing a “cold shoulder order” which would deny the person being sanctioned direct or indirect access to the Hong Kong securities markets for a period of time.