Forest for the Trees: Aren’t Directors Responsible for Disclosures in Prospectuses?
Capital Markets Law Journal, Forthcoming
23 Pages Posted: 13 Jul 2021
Date Written: June 24, 2021
China Forestry Holdings Company Limited raised some HK$1.68 billion, or approximately US$214.8 million, from its listing on the Main Board of the Stock Exchange of Hong Kong in December 2009. However, just over a year later, trading in its shares was suspended on discovery of serious accounting irregularities which led to its eventual winding-up and the delisting of its shares in June 2015 and February 2017 respectively.
For their respective failures in discharging their duties as sponsors for the listing, UBS AG and Standard Chartered Securities (Hong Kong) Limited were reprimanded and fined by the Hong Kong Securities and Futures Commission. Yet, rather inexplicably, no action appears to have been taken to hold some of the directors who authorised the prospectus accountable. This article avers that such inaction does not bode well for the development of the capital markets in Hong Kong as it ignores the important gate keeping role assumed by all directors during the initial public offering process when substantial funds are raised from the public.
Keywords: Prospectus Liability, Independent Directors, Disclosures
JEL Classification: K22, K41, G18
Suggested Citation: Suggested Citation