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The Court of First Instance has ordered Starlight Culture Entertainment Group Limited’s (Starlight) former chairman Mr Tong Shek Lun and two former executive directors, Ms Kinny Ko Lai King and Ms Regina Chung Wai Yu, to pay a sum of US$890,241.37 as compensation to Starlight following findings of misconduct in connection with their handling of the company’s disposal of subsidiaries in September 2008 (Notes 1, 2, 3 & 4).
The Court also ordered that Tong, Ko and Chung be disqualified from being directors or being involved in the management of any listed or unlisted corporation for five to seven years (Note 5).
The Securities and Futures Commission’s (SFC) investigation found, and Tong, Ko and Chung accepted, that:
- the trio had caused and/or procured Starlight to reduce the consideration for the disposal by US$1 million without proper justification and/or against the best interest of Starlight;
- they had diverted a mature business opportunity of Starlight to provide consultancy services to the purchaser to Tong’s private company, Extract Group Limited, which in turn received a secret profit of US$1 million;
- they had failed to ensure Starlight had fully complied with the Listing Rules by failing to disclose the arrangement of the consultancy service agreement and Tong’s interests therein.
Notes:
- Starlight was known as Karce International Holdings Company Limited at the material time until 18 December 2013 when its name was changed to Sinogreen Energy International Group Limited. Its name was further changed to Jimei International Entertainment Group Limited on 23 December 2014, and then to its current name, Starlight, on 6 July 2017. It listed on the Main Board of the Stock Exchange of Hong Kong Limited on 13 March 1998, and was principally engaged in manufacturing and trading electronic products, conductive silicon rubber keypads, printed circuit boards, and telecommunication products as well as investment holdings at the material time.
- The SFC commenced the proceedings in September 2014 under section 214 of the Securities and Futures Ordinance. For details, please see the SFC’s press release dated 8 October 2014.
- The orders were made following the Court’s approval that the proceedings could be disposed by way of Carecraft procedure which require the submission of an agreed statement of facts by both parties to the Court upon which the Court will assess the orders that should be made.
- The amount of the compensation consists of: (i) US$495,000 as compensation for the loss suffered by Starlight. A full refund of the US$1 million secret profit is not awarded as Tong’s private company, Extract Group Limited, had returned US$505,000 to the purchaser in 2012 for settling a separate action instituted by the purchaser over its non-performance of the relevant consultancy service agreement; and (ii) US$395,241.37 as the pre-judgment interest.
- Tong is disqualified from being a director for seven years, whilst Ko and Chung are each disqualified from being a director for five years. The disqualification orders took effect on 10 August 2016, which was the date in which the parties first appeared before the Court to dispose the proceedings by way of Carecraft procedure.
