SFC seeks disqualification orders against former directors of Luxey International (Holdings) Limited

7 Mar 2019

The Securities and Futures Commission (SFC) has commenced legal proceedings in the Court of First Instance to seek court orders to disqualify the former chairman and executive director of Luxey International (Holdings) Limited (Luxey), Mr Joseph Lau Chi Yuen, and the company’s former chief executive officer and executive director, Mr Chung Man Wai (Notes 1 to 4).

The SFC’s action follows an investigation into Luxey’s very substantial acquisition of Easy Time Trading Limited (Easy Time) which held a 99 per cent stake in Ratio Knitting Factory Limited (Ratio) at the time of the acquisition on 31 March 2011.

The SFC alleges that Lau breached his director’s duties to Luxey by utilising nominees Big Good Management Limited (Big Good) and its sole shareholder and director, Mr Ma Hoi Cheuk, who acted on his instructions, to acquire Ratio for $50.1 million before Ratio (through Easy Time) was resold to Luxey for $390 million.  Lau allegedly obtained a profit or at least part of such profit – namely, the difference between the $50.1 million Big Good paid to acquire Ratio and the substantially higher price of $390 million for which Luxey acquired Ratio.  He also concealed his secret profit and/or material interest in these transactions (Scheme).

As a result of the Scheme, Luxey was deprived of the opportunity to acquire Easy Time or Ratio at a price substantially lower than the consideration of $390 million.

The SFC also alleges that Chung breached his director’s duties to Luxey by failing to make sufficient enquiries about the relationships among Lau, Ma and Big Good and to take steps to prevent Luxey from acquiring Easy Time at a substantially higher price while knowing or ought to have known that the Scheme, if carried out, would result in a loss to Luxey. 

The SFC further alleges that Lau and Chung were culpably responsible for the publication of false statements in Luxey’s announcement and circular relating to the very substantial acquisition in that Big Good and Ma were not disclosed as non-independent third parties and the transaction was not at arm’s length and the terms of the acquisition were not on normal commercial terms, nor were they fair and reasonable and in the interests of Luxey and its shareholders as a whole. 

Against this background, the SFC alleges that Lau and Chung, in their capacity as directors of Luxey at the material time, conducted the company’s business or affairs in a manner involving fraud, misfeasance or other misconduct, resulting in Luxey’s shareholders not having been given all the information as they might reasonably expect.



  1. Luxey was listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited on 7 July 2000.  It was known as Intcera Inc. before it was listed.  It changed its name to Intcera High Tech Group Limited on 2 June 2000 and then to China Post E-Commerce (Holdings) Limited on 29 April 2009 before changing to its current name on 22 December 2011.  Luxey is principally engaged in the manufacture and sale of apparel.
  2. At the material time, Lau was the chairman and executive director of Luxey while Chung was the chief executive officer and executive director of Luxey.
  3. The legal proceedings were commenced under section 214 of the Securities and Futures Ordinance (SFO).  The first hearing of the petition presented by the SFC will be heard in the Court of First Instance on 6 May 2019.
  4. Under section 214 of the SFO, the court may, inter alia, make orders to disqualify a person from being a director or being involved, directly or indirectly, in the management of any corporation for a period of up to 15 years, if the person is found to be wholly or partly responsible for the company’s affairs having been conducted in a manner, amongst other, involving defalcation, fraud, misfeasance or other misconduct towards it or its members.

Page last updated : 8 Mar 2019