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Screenshot of a breaking news alert e-mail from Q2 2017
The China Environmental Energy Investment Ltd’s failure to comply with the announcement, circular and prior shareholders’ approval requirements of the HKEX Listing Rules has deprived the investors of their right to the timely receipt of information in relation to the Company’s major transactions, and for shareholders, their right to vote on those transactions before they were entered into by the Company.
The transactions in this case were not part of the Company’s ordinary and usual course of business. Such failure has a negative impact on market integrity and investors’ confidence in our securities market.
It is important that due consideration is given to the Company’ compliance with the Exchange Listing Rules before a transaction is entered into.
To ensure they can fulfil their duties, directors are expected to participate in continuous professional training to develop and refresh their knowledge and skills.
The Exchange takes non-compliance with the Exchange Listing Rules seriously and will take action against issuers and directors who breach their obligations and duties.
The Listing Committee of The Stock Exchange of Hong Kong Limited
- China Environmental Energy Investment Limited (“Company”) (Stock Code: 986)
for breaching Rules 14.34, 14.38A, 14.40 and 14.41 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Exchange Listing Rules”) for failing to comply with the announcement, circular and prior shareholders’ approval requirements in relation to certain share transactions;
- Ms Chen Tong (“Ms Chen”), current executive director (“ED”), Chairman and Chief Executive Officer of the Company; and
- Mr Xiang Liang (“Mr Xiang”), current ED of the Company,
for breaching their obligations under the Declaration and Undertaking with regard to Directors given to The Stock Exchange of Hong Kong Limited (the “Exchange”) in the form set out in Appendix 5B to the Exchange Listing Rules (the “Undertaking”) for failing to use their best endeavours to procure the Company’s compliance with the Exchange Listing Rules.
For the avoidance of doubt, the Exchange confirms that the sanctions and directions in this news release apply only to the Company, Ms Chen and Mr Xiang, and not to any other past or present members of the board of directors of the Company.
As a consequence of settlement:
- the Company admits its breach of the Listing Rules as described above; and
- Ms Chen and Mr Xiang admit their breaches of the Undertakings to the Exchange as described above.
The Company, Ms Chen and Mr Xiang accept the respective sanctions imposed on them by the Listing Committee as set out below.
This case involves the Company’s failure to comply with the Exchange Listing Rules in relation to the following share transactions (together, the “Share Transactions”):
- On 20 July 2016, the Company acquired a total of 17,840,000 shares in Luen Wong Group Holdings Limited (Stock Code: 8217) on the market for a total consideration of HK$124,465,800.
- On 20 and 21 July 2016, the Company disposed of a total of 817,030,000 shares in China Jicheng Holdings Limited (Stock Code: 1027) on the market for a total consideration of HK$176,269,580.
Trading in shares was not in the ordinary and usual course of the Company’s business, and the Share Transactions constituted major transactions of the Company. The Company did not comply with the announcement, circular and prior shareholders’ approval requirements pursuant to Chapter 14 of the Exchange Listing Rules prior to each of the Share Transactions.
Ms Chen and Mr Xiang were delegated with the power for the investment of shares, and therefore were the only directors of the Company who were aware of the Share Transactions. Ms Chen and Mr Xiang did not prepare or procure a size test for each of the Share Transactions, which resulted in the Company’s breaches of the Exchange Listing Rules.
The Company disclosed the Share Transactions in its announcement dated 18 August 2016 and admitted its breaches of the Exchange Listing Rules. A circular was published by the Company on 22 September 2016, and the Share Transactions were ratified by the Company’s shareholders on 11 October 2016.
During the investigation by the Listing Department, it was revealed that Ms Chen and Mr Xiang have not had any formal training in relation to Chapter 14 of the Exchange Listing Rules within the past two years, apart from receiving regular updates from the company secretary on regulatory developments and reading publications in relation to financial reporting, investment and corporate management.
The complete announcement can be seen here.