Hong Kong SFC Commenced Legal Proceedings to Disqualify 6 Ex-Directors, Chairman & CEO of First Credit Finance Group for Breach of Fiduciary Duties, Failing to Disclose Cho Kwai Chee was Acting as De Facto Director for Being Involved in Company Management & Making Decisions of a Board Director Capacity & Subsequently Subscribed to Share Placement that Stated All Share Subscribers are Independent 3rd-Parties
24th November 2023 | Hong Kong
The Hong Kong SFC (Securities & Futures Commission) has commenced legal proceedings to disqualify 6 former Directors, Chairman & CEO of First Credit Finance Group for breach of fiduciary duties, failing to disclose Cho Kwai Chee was acting as de facto Director for being involved in company management & making decisions of a board director capacity & subsequently subscribed to share placement that stated all share subscribers are independent 3rd-parties. Hong Kong SFC: “The former directors and former de facto director are: Mr Sin Kwok Lam, former chairman and executive director; Mr Cho Kwai Chee, former de facto director; Mr Tsang Yan Kwong, former chief executive officer and executive director; Mr Leung Wai Hung and Ms Ho Siu Man, both former executive directors; Mr Tony Tai Man Hin, former independent non-executive director. The SFC’s investigation found that from December 2015 to June 2017, Cho acted as a de facto director of First Credit by taking part in the management of the company’s business or affairs and making decisions of a directorial nature. In January 2016, Cho was a placee in a share placement conducted by First Credit. Two months later, Cho and his brother (namely, Kevin Cho Kwai Yee) were subscribers of untaken rights shares in the rights shares issued by First Credit. First Credit’s respective announcements for the completion of the placing and rights issue (announcements), however, stated that all the placees and subscribers were independent third parties. The investigation led to the SFC’s allegations that Sin, Tsang, Leung, Ho and Cho breached their duties towards First Credit by (i) failing to disclose Cho’s de facto directorship; and (ii) causing the company to publish false and/or misleading information in the announcements regarding the independence of Cho and/or his brother. Sin, Tsang, Ho and Tai also breached their duties by failing to consider the dilution impact of the placing on the company’s shareholders when approving the placing proposal.” First Credit’s shares have been listed on GEM of The Stock Exchange of Hong Kong Limited since 13 December 2011. First Credit and its subsidiaries are principally engaged in the business of money lending and securities trading. On 24 November 2017, the SFC suspended the trading of First Credit’s shares pursuant to section 8(1) of the Securities and Futures (Stock Market Listing) Rules. See below for more info:
“ Hong Kong SFC Commenced Legal Proceedings to Disqualify 6 Ex-Directors, Chairman & CEO of First Credit Finance Group for Breach of Fiduciary Duties, Failing to Disclose Cho Kwai Chee was Acting as De Facto Director for Being Involved in Company Management & Making Decisions of a Board Director Capacity & Subsequently Subscribed to Share Placement that Stated All Share Subscribers are Independent 3rd-Parties “
Hong Kong SFC Commenced Legal Proceedings to Disqualify 6 Ex-Directors, Chairman & CEO of First Credit Finance Group for Breach of Fiduciary Duties
22nd Nov 2023 – The Securities and Futures Commission (SFC) has commenced legal proceedings under section 214 of the Securities and Futures Ordinance (SFO) in the Court of First Instance to seek disqualification orders against five former directors and a former de facto director of First Credit Finance Group Limited (First Credit) for allegedly breaching their fiduciary duties (Notes 1 & 2). The former directors and former de facto director are: Mr Sin Kwok Lam, former chairman and executive director; Mr Cho Kwai Chee, former de facto director; Mr Tsang Yan Kwong, former chief executive officer and executive director; Mr Leung Wai Hung and Ms Ho Siu Man, both former executive directors; Mr Tony Tai Man Hin, former independent non-executive director. The SFC’s investigation found that from December 2015 to June 2017, Cho acted as a de facto director of First Credit by taking part in the management of the company’s business or affairs and making decisions of a directorial nature. In January 2016, Cho was a placee in a share placement conducted by First Credit. Two months later, Cho and his brother (namely, Kevin Cho Kwai Yee) were subscribers of untaken rights shares in the rights shares issued by First Credit. First Credit’s respective announcements for the completion of the placing and rights issue (announcements), however, stated that all the placees and subscribers were independent third parties.
The investigation led to the SFC’s allegations that Sin, Tsang, Leung, Ho and Cho breached their duties towards First Credit by (i) failing to disclose Cho’s de facto directorship; and (ii) causing the company to publish false and/or misleading information in the announcements regarding the independence of Cho and/or his brother. Sin, Tsang, Ho and Tai also breached their duties by failing to consider the dilution impact of the placing on the company’s shareholders when approving the placing proposal. As part of the legal action, the SFC is also seeking an order for First Credit to publish the court’s findings in the proceedings so that shareholders of the company will be informed of Cho’s former de facto directorship in the company and the false and/or misleading disclosures made by the company in the announcements.
Notes:
- First Credit’s shares have been listed on GEM of The Stock Exchange of Hong Kong Limited since 13 December 2011. First Credit and its subsidiaries are principally engaged in the business of money lending and securities trading. On 24 November 2017, the SFC suspended the trading of First Credit’s shares pursuant to section 8(1) of the Securities and Futures (Stock Market Listing) Rules.
- Under section 214 of the SFO, the court may, among other things, make orders to disqualify a person from being a director or being involved, directly or indirectly, in the management of any corporation for 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, among other things, involving defalcation, fraud, misfeasance or other misconduct towards it or its members. The court may also make any other order it considers appropriate.
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