SFC publicly censures Chen Chi-Te and Kenneth C.M. Lo for breaches of the Takeovers Code

7 Sep 2017

The Securities and Futures Commission (SFC) has publicly censured Chen Chi-Te and Kenneth C.M. Lo for breaching the dealing provisions under the Takeovers Code (Note 1).

As directors of Taiwan Cement Corporation (TCC), both Chen and Lo are parties acting in concert with TCC in a proposed privatisation of TCC International Holdings Limited by way of a scheme of arrangement (Note 2) whereby shareholders would be entitled to receive either a cash payment or TCC shares.

Chen held shares in TCC International through related trusts which sold all his shares between 25 April and 28 June 2017. These dealings and the failure to make public disclosures of them constituted breaches of Rule 21.2 (Note 3) and Rule 22 (Note 4) of the Takeovers Code.

Lo, together with his close relatives, controls four investment companies which acquired a total of four million shares in TCC between 27 and 31 July 2017. These purchases and the failure to disclose them constituted breaches of Rule 21.3 (Note 5) and Rule 22 of the Takeovers Code.

Both Chen and Lo accept that they breached the Takeovers Code and agree to the disciplinary action taken against them.

The SFC wishes to take this opportunity to remind practitioners and parties who wish to take advantage of the securities markets in Hong Kong that they should conduct themselves in matters relating to takeovers and mergers in accordance with the Takeovers Code. If there is any doubt about the application of the rules, the Takeovers Executive (Note 6) should be consulted at the earliest opportunity.

A copy of the Executive Statement can be found in the “Listings & takeovers – Takeovers and Mergers – Decisions & statements – Executive decisions and statements” section of the SFC website.




  1. The Code on Takeovers and Mergers.
  2. An offer period commenced on 20 April 2017 when TCC International and TCC made a joint announcement about the possible privatisation.
  3. Rule 21.2 requires that during an offer period, the offeror and persons acting in concert with it must not sell any securities in the offeree company without the prior consent of the Takeovers Executive.
  4. Rule 22 of the Takeovers Code provides that dealings in relevant securities by an offeror or the offeree company, and by any associates, for their own account during an offer period must be publicly disclosed in accordance with Notes 5, 6 and 7 to this Rule 22.
  5. Rule 21.3 provides that “[e]xcept with the consent of the Executive, where the consideration under an offer includes securities of the offeror or a person acting in concert with it, neither the offeror nor any person acting in concert with it may deal in any such securities or conduct any on-market buy-back of such securities during the offer period.”
  6. The Executive Director of the SFC’s Corporate Finance Division or his delegate.


Page last updated : 7 Sep 2017