Hong Kong: former responsible officer of SHKI suspended for sponsor-related failures

The Securities and Futures Commission (SFC) has suspended Mr. Eric Shum Kam Chi as a representative in all regulated activities and withdrawn approval for him to act as a responsible officer for 3 years.   As responsible officer and sponsor principal of SHKI at the relevant time, Mr. Shum was found to be responsible for deficiencies in the sponsor work of Sun Hung Kai International Limited (SHKI) relating to the listing of Sino-Life Group Limited.

SHKI's regulatory breaches were attributed to Shum who failed to discharge his duties as its senior management.  As head of the firm’s transaction team, Shum failed to:

• assess the accuracy and the completeness of the information submitted by Sino-Life to demonstrate that it satisfied the financial requirements to list on the Growth Enterprise Market of the Stock Exchange of Hong Kong (SEHK);
• ascertain the existence of various encumbrances on the title of a major business deal of Sino-Life in Taiwan;
• properly assess the business of the Sino-Life’s wholly-owned subsidiary in Taiwan;
• ensure true, accurate and complete disclosure was made to the SEHK and in Sino-Life’s prospectus and breached the sponsor undertaking to the SEHK by filing untrue statements in the sponsor declaration; and
• keep proper books and records in relation to the sponsor work conducted. 

Although Shum had knowledge of the fact that SHKI was selective in its disclosure to the SEHK during the listing process, he nevertheless signed the sponsor declaration thereby holding out that all information submitted to the SEHK was true, accurate and complete to his knowledge.  Further details can be found in the SFC's press release of 16 September 2014 and statement of disciplinary action. 

The SFC had previously found (and the Securities and Futures Appeals Tribunal (SFAT) subsequently affirmed) that SHKI had failed to conduct proper due diligence on Sino-Life’s business in relation to a number of material issues, and had placed undue reliance on the work delegated to external experts.  Disciplinary action was taken against SHKI in January 2014.