On 17 March 2022, the Securities and Futures Commission (SFC) publicly censured Wonderful Sky Financial Group Holdings Limited (Wonderful Sky) and Liu Tianni and publicly criticised Liu Kiki Ching Tung for breaching the Code on Share Buy-backs. Wonderful Sky (stock code: 1260), a consultancy firm principally engaged in the provision of financial public relations services and the organisation and coordination of international roadshows, was listed on the Main Board of the Stock Exchange of Hong Kong Limited in 2012.
Wonderful Sky bought back 42,500,000 shares by block trade in March 2020 which was pre-arranged and pre-agreed between Wonderful Sky and the vendor. This constituted an off-market share buy-back and therefore requires the approval of the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director and of Wonderful Sky’s disinterested shareholders. However, no such approval was obtained.
Liu Tianni, the Chairman, Chief Executive Officer and an executive director of Wonderful Sky being the main decision maker for the buy-back and Liu Kiki Ching Tung, a deputy general manager of Wonderful Sky at the material time participating in implementing the buy-back under Liu Tianni’s instructions accepted that they failed to comply with the Code on Share Buy-backs and consented to the disciplinary action taken against them.
This enforcement action reflects that compliance with the Code on Share Buy-backs is one of SFC’s areas of focus. Practitioners and parties who are actively engaged in the securities market must comply with the Share Buy-backs requirements and seek professional advice as and when needed.
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