Compliance & Regulation

SFC obtains disqualification orders against former directors of EganaGoldpfeil

The Securities and Futures Commission (SFC) announced that it has obtained disqualification orders in the Court of First Instance against three former directors of EganaGoldpfeil for their roles in the company's misapplication of funds.

The three former directors, namely, David Wong Wai Kwong, Peter Lee Ka Yue, and Chik Ho Yin, were disqualified from being a director or taking part in the management of any corporation in Hong Kong, without leave of the Court, for a period of nine years, six years and six years respectively, effective from 7th May 2020, according to an SFC press release.

The Court found that the three former directors had approved transactions and signed cheques giving rise to the company’s doubtful receivables amounting to about HKD2.55 billion, including payments to at least seven debtors which were in fact under the control of Wong and the underlying transactions for the payments were in fact not genuine commercial transactions.  They failed to carry out proper inquiries and perform appropriate due diligence before causing or permitting EHL to enter into the transactions and make the payments.

The SFC also sought compensation orders against the three former directors for a payment of HKD622 million to EHL, an amount equivalent to EHL's payment of HKD622 million to Peninsula International, a company owned by the family of the EHL's then chairman, to fund its purchase of some of EHL's shares.

In analysing the power of the Court under section 214 of the SFO, the Court accepted that a compensation order can, in an appropriate case, be made irrespective of whether a respondent has received any financial benefits.  The Court, however, declined to grant the compensation order being sought in this case, and considered it should remain with the liquidators of EGL to assess the efficacy as to whether it would be beneficial to bring proceedings in the name of EGL against any party.