The Securities and Futures Commission (SFC) has commenced civil proceedings under section 214 of the Securities and Futures Ordinance in the Court of First Instance against three current and former directors of First China Financial Network Holdings Ltd (First China) (Note 1).
Those involved in the SFC’s legal proceedings are: Mr Richard Yin Yingneng, former chairman of First China, Mr Wang Wen Ming and Mr Lee Yiu Sun, current chairman and chief executive officer of First China.
The SFC alleges they breached their duties to the company resulting in First China distributing a further dividend of $18,692,000 to Fame Treasure Ltd, the seller in the 2007 acquisition by First China of GoHi Holdings Ltd (GoHi). Wang, the current Chairman of First China, was a majority shareholder of GoHi at the time via his stake in Fame Treasure Ltd.
Yin, Wang and Lee claimed the distribution by First China was part of a mutual understanding and agreement between the parties to the acquisition of GoHi. The SFC alleges this understanding and agreement about the distribution did not exist and as such both Fame Treasure Ltd and indirectly Wang were not entitled to the money.
The SFC is seeking court orders to disqualify Yin, Wang and Lee (or any of them) as company directors for such period as the court considers. As part of the legal proceedings, the SFC is also seeking court orders that First China and/or its relevant subsidiaries bring court proceedings against Fame Treasure Ltd and/or other parties to recover the amount of the dividend distributed as a result of the alleged misconduct.
Notes:
- First China was listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited on 11 January 2002 (stock code 8123). The group principally provides financial services in Hong Kong, such as stock brokerage, margin financing, corporate finance and wealth management services.
- A summary of the material events and the allegations is posted on the SFC website.