SFC publicly censures Zheng Dunmu and imposes a cold-shoulder order for breach of the Takeovers Code

22 Nov 2016

The Securities and Futures Commission (SFC) has publicly censured and imposed a 24-month cold-shoulder order (Note 1) against Zheng Dunmu for breaching the mandatory general offer obligation of the Takeovers Code (Note 2).

At the relevant time, Zheng was chairman, executive director and a controlling shareholder of Changgang Dunxin Enterprise Company Limited and held a 56.25% interest in Changgang Dunxin indirectly through three companies wholly owned by him. Part of this interest was pledged to a lender as collateral for a loan.

On 23 February 2015, the lender sold the pledged shares, reducing Zheng’s indirect interest in Changgang Dunxin to 46.18%. Shortly after becoming aware of the disposals, Zheng personally acquired 1.01% and 2.97% of Changgang Dunxin on 26 and 27 February respectively. A mandatory general offer obligation under the Takeovers Code was triggered on 27 February as Zheng increased his interest in Changgang Dunxin to 50.16%, but no offer was made.

Zheng told the Executive (Note 3) that he was not aware of the mandatory general offer obligation. He accepts that he has breached the Takeovers Code and deprived Changgang Dunxin’s shareholders of the right to receive a general offer for their shares. Zheng agreed to the current disciplinary action against him.

"Directors of a listed company must use the best of their abilities to comply with the Takeovers Code and seek professional advice as and when needed”, said Mr Brian Ho, the SFC’s Executive Director of Corporate Finance. “Zheng’s conduct fell short of the standards expected and disregarded one of the most fundamental provisions of the Takeovers Code. This merits strong disciplinary action.”

A copy of the Executive Statement is available on the SFC website (Note 4).



  1. Zheng will be denied direct or indirect access to the Hong Kong securities market for a period of 24 months commencing on 22 November 2016 to 21 November 2018.
  2. The Code on Takeovers and Mergers.
  3. The Executive Director of the SFC’s Corporate Finance Division or his delegate.
  4. The statement can be found in the “Executive decisions and statements” section of the SFC website at www.sfc.hk.

Page last updated : 22 Nov 2016