SFC commences disciplinary proceedings against Ngai Lai Ha for alleged breach of Takeovers Code

16 Sep 2020



The Securities and Futures Commission’s (SFC) Takeovers Executive (Note 1) has today commenced disciplinary proceedings before the Takeovers and Mergers Panel (Takeovers Panel) against Ms Ngai Lai Ha (Ngai), the chairperson of International Housewares Retail Company Limited (the Company) (Note 2) over a breach of the Code on Takeovers and Mergers (Takeovers Code) (Note 3).

The SFC alleges that in a number of acquisitions of the Company’s shares Ngai acquired on each occasion more than 2% voting rights of the Company from her lowest collective percentage interest in the preceding 12 months without making a mandatory general offer under the Takeovers Code (Note 4). 

Ngai, Mr Lau Pak Fai Peter (Lau) and their controlled company, Hiluleka Limited (the Concert Group) (Note 5) have been “acting in concert” under the Takeovers Code since the incorporation of Hiluleka (Note 6).

On 6 March 2019, the Concert Group’s shareholding in the Company reached 50.50% following Ngai’s purchase of 170,000 shares of the Company (Shares) at $2.01 per Share on the same date (the First Dealing). This represented an increase of more than 2% from the Concert Group’s lowest percentage interest in the Company in the preceding 12 months of 48.48%. No mandatory general offer was made as a result of the First Dealing.

Subsequent to the First Dealing, Ngai made 12 additional dealings in the Shares during the period from March to May 2019, and each of these dealings increased the collective percentage interest of the Concert Group by more than 2% from the lowest percentage interest in the respective preceding 12 months prior to the corresponding dealing. No mandatory general offer was made as a result of any of these dealings.

In summary, the Executive has identified 13 separate instances during the period from March to May 2019 where Ngai had triggered an obligation to make a mandatory general offer. Ngai has not made such an offer, and hence, she continues to breach Rule 26.1(d) of the Takeovers Code in respect of her failure upon each of the said 13 separate instances (Note 7).

End

Notes:

  1. Takeovers Executive means the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director.
  2. The Company is principally engaged in the retailing of housewares products. Its products are mainly sold under the brands of JHC, Japan Home, 123 by ELLA, $MART, City Life as well as online platforms JHC eshop and EasyBuy. The Company operates through three business segments: retail, wholesale, and licensing and others. The Company is also engaged in the licensing of franchise rights and the investment of properties through its subsidiaries. The shares of the Company were listed on the Main Board of the Stock Exchange of Hong Kong Limited on 25 September 2013.
  3. The Takeovers Code is issued by the SFC as one of its functions under the Securities and Futures Ordinance. The Takeovers Code is designed principally to afford fair treatment for shareholders by requiring equality of treatment of shareholders of the same class.
  4. Rule 26 is the overriding rule in the Takeovers Code and provides the circumstances in which a mandatory general offer must be made. This reflects General Principle 1 of the Takeovers Code and underpins the requirement for equal treatment of shareholders. Failure to make an offer that is required under Rule 26.1 constitutes a serious breach of the Takeovers Code.

    Under Rule 26.1 a mandatory offer will be triggered whenever a person (together with persons acting in concert) acquires, whether through a series of transactions over a period of time or not, 30% or more of the voting rights of a company. This is known as the trigger.

    A mandatory offer will also be triggered under Rule 26.1 if a person (together with persons acting in concert) collectively holds between 30% and 50% and acquires more than 2% from the lowest percentage held in any 12-month period. This is known as the creeper.  
  5. The Takeovers Code regards two or more persons as acting in concert in respect of a company if pursuant to an agreement or understanding they actively co-operate, through the acquisition of shares by any of them, to obtain or consolidate control of that company.
  6. Hiluleka is owned in equal share by Ngai and Lau and they have controlled this company since its incorporation in 2006.
  7. The disciplinary proceedings before the Takeovers Panel will be held in public. Details of the proceedings can be found in the "Regulatory functions – Listings & takeovers – Takeovers & Mergers – Current disciplinary proceedings before the Takeovers Panel" section of the SFC website. The procedures for disciplinary hearings before the Takeovers Panel are set out in section 13 of the Introduction to the Takeovers Code and in the Rules of Procedure for disciplinary hearings.

    If the Takeovers Panel finds that there is a breach of the Takeovers Code, it is empowered to issue a range of sanctions including imposing a "cold shoulder order" which would deny the person being sanctioned direct or indirect access to the Hong Kong securities markets for a period of time specified by the Takeovers Panel.

 



Page last updated : 16 Sep 2020