Hontex - A Settlement of Convenience?

34 Pages Posted: 15 Nov 2012

See all articles by Chee Keong Low

Chee Keong Low

Chinese University of Hong Kong (CUHK) - School of Accountancy

Date Written: November 13, 2012

Abstract

By granting a consent order on 20 June 2012, the Court of First Instance initiated relief for some 7,700 long suffering shareholders of Hontex International Holdings Company Limited whose shares had been suspended from trading on The Stock Exchange of Hong Kong since 29 March 2010 at the request of the Securities and Futures Commission (‘SFC’) on the basis of material misstatements in its listing prospectus, which is a market misconduct.

The authors submit that the settlement between the company and the SFC is not on firm legal footing as significant doubts prevail over whether the use of sections 213 and 298 of the Securities and Futures Ordinance will withstand the test of a fully ventilated case in court. In addition, the authors question whether the share repurchase scheme by Hontex actually compensates the proper class of investors.

Keywords: Misstatements in Prospectus, Powers of Regulator, Stock Exchange of Hong Kong

JEL Classification: K22, K42, G38

Suggested Citation

Low, Chee Keong, Hontex - A Settlement of Convenience? (November 13, 2012). Available at SSRN: https://ssrn.com/abstract=2175950 or http://dx.doi.org/10.2139/ssrn.2175950

Chee Keong Low (Contact Author)

Chinese University of Hong Kong (CUHK) - School of Accountancy ( email )

1018 Cheng Yu Tung Building
Shatin, N.T.
Hong Kong
(852) 3943-7891 (Phone)
(852) 2603-5114 (Fax)

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