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The Securities and Futures Commission (SFC) has obtained disqualification orders in the Court of First Instance against three former senior executives of China Best Group Holding Limited (China Best) for breaching their directors’ duties in handling a proposed acquisition of interests in a coal mine in 2008.
The Court has ordered that Mr Wang Jian Hua, former advisor to the board of China Best be disqualified from being a director or being involved in the management of any listed or unlisted company in Hong Kong, without leave of the Court, for 10 years. Wang’s wife, Ms Ma Jun Li, former chairman and executive director of China Best, and Mr Zhang Da Qing, former chief executive officer and executive director of China Best, were both disqualified for six years (Notes 1, 2 & 3).
The disqualification orders were made after the Court earlier found that Wang had diverted to himself the corporate opportunity of a proposed acquisition of 60% of the equity interest in ChongHou Energy Resources Limited from Asset Rich International Limited (Asset Rich), a company ultimately owned by a nominee of Wang and therefore not third parties independent of China Best.
Wang was also found to have devised a scheme to conceal his personal benefit in the proposed acquisition at the expense of China Best and failed to disclose his interest to China Best’s board and in the issue of two false and misleading announcements dated 3 March and 3 December 2008.
The Court also found that Ma and Zhang had failed to make reasonable enquiries in respect of Asset Rich’s and its ultimate beneficial shareholder’s background and connection with Wang and had wrongfully authorized the issue of the two announcements.
In making the disqualification orders, the Court considered the gravity of Wang’s misconduct, his role as part of the senior management of the company and the fact that the proposed acquisition was a very substantial acquisition for China Best under the Listing Rules of the Stock Exchange of Hong Kong. The disqualification period imposed for Ma and Zhang took into account their failure to make enquiries and inform themselves about the company’s affairs and to exercise care and diligence in the proposed acquisition.
Notes:
- Wang was the chairman and an executive director of China Best until he resigned with effect from 25 November 2005. Notwithstanding his resignation, Wang held a position of advisor to the board of China Best and remained part of the senior management at material times. Ma was appointed as an executive director of China Best on 29 August 2003 and was elected as the chairman on 25 November 2005. Zhang was appointed as China Best’s chief executive officer and an executive director on 5 June 2007. Both Ma and Zhang had resigned from China Best with effect from 4 October 2011.
- China Best was listed on the Main Board of the Stock Exchange of Hong Kong Limited on 26 March 1996. The principal activities of China Best’s associates and subsidiaries were coal processing, international air and sea freight forwarding and the provision of logistics services as well as trading of securities.
- The SFC commenced proceedings under section 214 of the Securities and Future Ordinance (SFO) in July 2013. Please see SFC’s press release dated 31 July 2013.
- Under section 214 of the SFO, the Court may make orders disqualifying a person from being a company director or being involved, directly or indirectly, in the management of any corporation for up to 15 years, if the person is found to be wholly or partly responsible for the company’s affairs having being conducted in a manner involving defalcation, fraud or other misconduct.
