The Securities and Futures Commission (SFC) has obtained a disqualification order in the Court of First Instance (Court) against Mr Poon Tsz Hang, the former financial controller and company secretary of Qunxing Paper Holdings Company Limited (Qunxing) (Notes 1 and 2).
Under the Court order, Poon is disqualified for two years from being a director, liquidator, receiver or manager of the property or business, and being involved in the management of any listed or unlisted corporation in Hong Kong without leave of the Court. He has also been ordered to pay the SFC’s costs in these legal proceedings (Note 3).
These legal proceedings began in September 2019 under section 214 of the Securities and Futures Ordinance (SFO) against, inter alia, Poon, for the disclosure of false and misleading information. This followed Court orders made in February 2018 against Qunxing and the company’s former chairman and vice chairman, Mr Zhu Yu Guo and his son, Mr Zhu Mo Qun, requiring them to compensate investors after legal proceedings brought by the SFC under section 213 of the SFO. The distribution of $92 million in compensation to around 27,000 eligible investors by the Court-appointed administrators was completed in January 2023 (Note 4).
The SFC’s investigation found that Qunxing’s annual turnover was materially overstated and its bank borrowings understated in the company’s IPO prospectus issued in September 2007 – which contained its 2006 financial statements – and its published financial statements from 2007 to 2011.
Whilst serving as Qunxing’s most senior finance officer, Poon failed to discharge his duties and responsibilities in overseeing the company’s accounting and finance functions and internal controls. Had Poon properly fulfilled his duties and responsibilities as the company’s financial controller, he would reasonably have been likely to discover the relevant irregularities in Qunxing’s financial statements (Note 5).
Moreover, in his capacity as Qunxing’s company secretary, Poon failed in his duties to immediately inform the company’s board or address its reporting and compliance obligations in relation to a restructuring matter concerning a subsidiary of Qunxing, which implied a sudden deterioration of its financial position.
Notes:
- Qunxing’s shares were listed on the Main Board of the Stock Exchange of Hong Kong Limited (SEHK) on 2 October 2007. On 30 March 2011, at the request of Qunxing, the SEHK suspended trading of Qunxing’s shares. The listing of its shares was cancelled with effect from 30 November 2017.
- Poon was a former senior financial manager of Qunxing from 10 December 2007 to 7 May 2009, a former financial controller of Qunxing from 8 May 2009 to 1 April 2014, and Qunxing’s former company secretary from 8 January 2014 to 1 April 2014.
- The order was made following the Court’s approval that the proceedings could be disposed of by way of Carecraft procedure where the Court determines the appropriate orders to be made based on an agreed statement of facts and agreed proposed orders.
- Specifically, Qunxing and the company’s former chairman and vice chairman, the Zhus, were ordered by the Court in legal proceedings under section 213 of the SFO to compensate investors who subscribed for Qunxing shares in its initial public offering or purchased the company’s shares in the secondary market between 2007 and 2011. Please see SFC’s press releases dated 20 December 2013, 23 January 2014, 31 March 2014, 4 April 2014 and 7 February 2018.
- The judgment is available on the Judiciary’s website (Case No. HCMP 1439 of 2019).
