Hong Kong SFC Disqualifies Former Hong Kong-Listed Fuguiniao Co Ltd CFO Chan Wai Shing for 2 Years & Pay for Costs of Proceedings for Showing Serious
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Hong Kong SFC Disqualifies Former Hong Kong-Listed Fuguiniao Co Ltd CFO Chan Wai Shing for 2 Years & Pay for Costs of Proceedings for Showing Serious Lack Of Understanding Of Role, Responsibilities & Duties as CFO of A Listed Company, Fuguiniao Provided $683 Million as Pledges for Bank Loans to Substantial Shareholder & External Parties Without Proper Disclosure with $228 Million Withheld by Banks after Defaults, Annual Reports from 2013 to 2015 False & Misleading 7th February 2024 | Hong Kong
The Hong Kong Securities and Futures Commission (SFC) has disqualified former Hong Kong-listed Fuguiniao Co Ltd CFO Chan Wai Shing for 2 years and to pay for costs of proceedings for showing serious lack of understanding of role, responsibilities & duties as CFO of a listed company. Fuguiniao Co Ltd had provided $683 million as pledges for bank loans to a substantial shareholder & external parties without proper disclosure, with $228 million withheld by banks after defaults on loans. From 2013 to 2015, Fuguiniao annual reports were therefore false & misleading. Hong Kong SFC: “ The Securities and Futures Commission (SFC) has obtained a disqualification order in the Court of First Instance against Mr Chan Wai Shing, former chief financial officer (CFO) and company secretary of Fuguiniao Co., Ltd. Chan was disqualified from being a director, liquidator, or receiver or manager of the property or business, of Fuguiniao or any corporation in Hong Kong or being involved in the management of Fuguiniao or any listed corporation in Hong Kong, without the leave of the court, for a period of two years. He was also ordered to pay the SFC’s costs in the proceedings. The disqualification order was made after Chan admitted his failures, which showed a serious lack of understanding of his role, responsibilities, and duties as CFO of a listed company. In its judgment, the court said: “There is no excuse for a man occupying the important position of CFO of a listed company not to have discharged his duties to Fuguiniao so that the interest of the innocent investing public may be safeguarded”. The SFC’s investigation found that Fuguiniao provided a number of deposit pledges totalling about RMB5.349 billion as security for bank credit facilities extended to a substantial shareholder and other external parties without proper disclosure. In the end, RMB1.788 billion worth of the deposit pledges were withheld by the banks after defaults on the loans, with the balance released. The non-disclosed deposit pledges rendered the annual and interim reports of Fuguiniao for the financial years from 2013 to 2015 false and misleading. The SFC alleged that Chan, in his capacity as Fuguiniao’s CFO and company secretary, had acted in serious dereliction of his duties, while three former directors of the company were also involved in and/or had knowledge of these undisclosed deposit pledges. Specifically, Chan failed to ascertain whether deposits of Fuguiniao were subject to pledges with banks, monitor the company’s financial affairs (including its material transactions and significant deposit pledges), and follow up the matter even after revelation of the undisclosed deposit pledges by the company’s auditor and forensic investigator. He also failed to ensure or verify the accuracy of the company’s consolidated financial statements and other corporate announcements, and ensure its proper compliance with the Listing Rules and relevant disclosure requirements.”
“ Hong Kong SFC Disqualifies Former Hong Kong-Listed Fuguiniao Co Ltd CFO Chan Wai Shing for 2 Years & Pay for Costs of Proceedings for Showing Serious Lack Of Understanding Of Role, Responsibilities & Duties as CFO of A Listed Company, Fuguiniao Provided $683 Million as Pledges for Bank Loans to Substantial Shareholder & External Parties Without Proper Disclosure with $228 Million Withheld by Banks after Defaults, Annual Reports from 2013 to 2015 False & Misleading “
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Hong Kong SFC Disqualifies Former Hong Kong-Listed Fuguiniao Co Ltd CFO Chan Wai Shing for 2 Years & Pay for Costs of Proceedings for Showing Serious Lack Of Understanding Of Role, Responsibilities & Duties as CFO of A Listed Company, Fuguiniao Provided $683 Million as Pledges for Bank Loans to Substantial Shareholder & External Parties Without Proper Disclosure with $228 Million Withheld by Banks after Defaults, Annual Reports from 2013 to 2015 False & Misleading
Hong Kong, Asia’s leading financial centre 6th February 2024 – The Securities and Futures Commission (SFC) has obtained a disqualification order in the Court of First Instance against Mr Chan Wai Shing, former chief financial officer (CFO) and company secretary of Fuguiniao Co., Ltd (Fuguiniao) (Notes 1 to 3).
Chan was disqualified from being a director, liquidator, or receiver or manager of the property or business, of Fuguiniao or any corporation in Hong Kong or being involved in the management of Fuguiniao or any listed corporation in Hong Kong, without the leave of the court, for a period of two years. He was also ordered to pay the SFC’s costs in the proceedings (Notes 4 & 5).
The disqualification order was made after Chan admitted his failures, which showed a serious lack of understanding of his role, responsibilities, and duties as CFO of a listed company. In its judgment, the court said: “There is no excuse for a man occupying the important position of CFO of a listed company not to have discharged his duties to Fuguiniao so that the interest of the innocent investing public may be safeguarded”.
The SFC’s investigation found that Fuguiniao provided a number of deposit pledges totalling about RMB5.349 billion as security for bank credit facilities extended to a substantial shareholder and other external parties without proper disclosure. In the end, RMB1.788 billion worth of the deposit pledges were withheld by the banks after defaults on the loans, with the balance released. The non-disclosed deposit pledges rendered the annual and interim reports of Fuguiniao for the financial years from 2013 to 2015 false and misleading.
The SFC alleged that Chan, in his capacity as Fuguiniao’s CFO and company secretary, had acted in serious dereliction of his duties, while three former directors of the company were also involved in and/or had knowledge of these undisclosed deposit pledges. Specifically, Chan failed to ascertain whether deposits of Fuguiniao were subject to pledges with banks, monitor the company’s financial affairs (including its material transactions and significant deposit pledges), and follow up the matter even after revelation of the undisclosed deposit pledges by the company’s auditor and forensic investigator. He also failed to ensure or verify the accuracy of the company’s consolidated financial statements and other corporate announcements, and ensure its proper compliance with the Listing Rules and relevant disclosure requirements.
The SFC’s proceedings against the three former directors of Fuguiniao are ongoing.
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