The Securities and Futures Commission (SFC) has commenced legal proceedings in the Court of First Instance against the former chairman and directors of Inno-Tech Holdings Limited (Inno-Tech) over alleged misconduct that caused the company to lose more than HK$125 million (Note 1).
The SFC alleges that Inno-Tech’s former chairman and director, Ms Wong Yuen Yee, and three former directors, namely Mr Robert Wong Yao Wing, Mr Wong Kwok Sing and Mr Lam Shiu San, breached their duties as directors in relation to the acquisitions and/or disposals of interests in three hotels and a gold mine on the Mainland between 2007 and 2010 resulting in substantial and material losses to Inno-Tech (Note 2).
Specifically, the SFC alleges that the four former directors have failed to:
- carry out adequate investigation into or due diligence prior to the acquisitions of the interests in the three hotels and the gold mine;
- negotiate the consideration for acquiring the interests in the three hotels and the gold mine;
- assess or to obtain any independent assessment of whether an investment in the gold mine was a commercially suitable or an appropriate one for Inno-Tech;
- assess the purchase price of the interests in the gold mine properly;
- give adequate consideration to who would be appropriate to appoint as directors and/or who to put in charge in respect of gold mining matters; and
- supervise the running of the gold mine properly.
The SFC is seeking orders that the four former directors be disqualified as company directors and that Inno-Tech bring proceedings against the four for compensation or, alternatively, that the four be ordered to pay compensation to Inno-Tech directly (Note 3).
The first hearing of the petition presented by the SFC will be heard in the Court of First Instance on 29 April 2015.
Notes:
- Inno-Tech has been listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited since 12 August 2002. Up to 2002, it was principally engaged in the provision of intranet design for residential communities and electronic property management software consultancy. According to its website, Inno-Tech is now engaged in the business of development and sale of intelligent home electronic application system and development of outdoor advertising business on the Mainland. Trading in Inno-Tech shares was suspended since 26 January 2015.
- The hotels and gold mine concerned are Xindu Hotel, Kaiping Hotel, Changlin Hotel and De Xing City Zhang Jia Fan Gold Mine. The transactions caused the company to lose more than HK$125 million. Please see Appendix A for further details.
- The legal proceedings were commenced under section 214 of the Securities and Futures Ordinance, under which the court may, among other things, make orders to disqualify a person from being a director or being involved, directly or indirectly, in the management of any corporation for up to 15 years. The court may also order a company to bring proceedings in its own name against any person specified in the order and may make any other order it considers appropriate.
A summary of the material events and the allegations is posted on the SFC website
