SFC publicly criticises CM Asset Management (Hongkong) Company Limited for breaches of Takeovers Code

11 Jul 2019

The Securities and Futures Commission (SFC) has publicly criticised CM Asset Management (Hongkong) Company Limited (CMAM) for its failure to disclose dealings in the shares of Mengke Holdings Limited (Note 1) in contravention of the Code on Takeovers and Mergers (Takeovers Code).

Between 2 August and 30 October 2018, CMAM, acting as the investment manager of Shareholder Value Fund (SVF), executed 26 trades in Mengke Holdings’ shares during an offer period (Note 2) and failed to disclose these dealings as required by Rule 22 of the Takeovers Code (Note 3). As the investment manager of SVF, CMAM owned or controlled over 5% of Mengke Holdings’ issued share capital at the relevant time and was therefore an associate of the company (Note 4).

CMAM accepts that it failed to comply with the Takeovers Code and agreed to the disciplinary action taken against it. It has implemented enhancements and remedial measures to ensure future compliance with the Takeovers Code.

The SFC wishes once again 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. In particular, associates must report their dealings in the relevant securities of the offeree company (and of the offeror company in the case of a securities exchange offer) during an offer period in accordance with Rule 22.

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



  1. Now known as Champion Alliance International Holdings Limited.
  2. An offer period commenced for Mengke Holdings on 2 August 2018 when it announced a possible sale of the 75% interest held by its controlling shareholder.
  3. Rule 22.1(a) of the Takeovers Code provides that "[d]ealings in relevant securities by an offeror or the offeree company, and by any associates of either of them, for their own account during an offer period must be publicly disclosed".
  4. The Takeovers Code defines an "associate" to include "a person who owns or controls 5% or more of any class of relevant securities issued by an offeror or the offeree company, including a person who as a result of any transaction owns or controls 5% or more".


Page last updated : 11 Jul 2019