Update on the SFC’s front-loaded regulatory approach

7 Feb 2020

The Securities and Futures Commission (SFC) today published a special edition of its SFC Regulatory Bulletin to provide an update on its front-loaded approach to address market quality and corporate conduct issues. Case studies illustrate the SFC’s key areas of concern and recent regulatory interventions in initial public offering (IPO) applications and corporate transactions.

In a number of cases, failures on the part of directors, often involving conflicts of interest, played a central role in dubious corporate transactions involving overvalued acquisitions and suspect valuations. Directors are reminded of their obligations to guard shareholders’ interests and remain professional and vigilant when performing their duties.

Other cases highlight the need for IPO sponsors to conduct proper due diligence and exercise professional scepticism when assessing IPO applicants, and stress that sponsors bear responsibility for the due diligence work conducted by third-party professionals.

"Tackling misconduct by listed companies is a high priority," said Mr Ashley Alder, the SFC’s Chief Executive Officer. "Using our front-loaded approach, we aim to intervene early in situations where market integrity is at serious risk and will not hesitate to hold individuals accountable for their actions."

The SFC’s front-loaded regulatory approach combines early regulatory intervention in listing matters and enhanced supervision of intermediaries which are complemented by focused enforcement actions against firms with important gatekeeping functions and individuals in senior roles.

The bulletin is available on the SFC website. Members of the public may subscribe using the form available under the "Subscribe" link.


Page last updated : 14 Feb 2020