Since the statutory regime for disclosure of price sensitive information (“inside information”) came into effect on 1 January 2013, the SFC has been proactively monitoring corporate information and disclosures to detect and investigate issues and has taken enforcement action where appropriate.
Under s.307B(1) of the Securities and Futures Ordinance (Cap. 571) (“SFO”), a listed company must as soon as reasonably practicable disclose any inside information after it has come to its knowledge (the “Disclosure Requirements”), while under s.307G(1) of the SFO, officers of a listed company must take all reasonable measures from time to time to ensure proper safeguards exist to prevent a breach of the Disclosure Requirements by the listed company (the “Proper Safeguards Obligation”). Breaches could result in the SFC initiating enforcement action before the Market Misconduct Tribunal (the “MMT”), and penalties, including fines of up to HKD8 million being imposed on the listed company and its directors or chief executive, and order the liable person not to be or continue to be “a director, liquidator or receiver or manager of the property or business, of a listed corporation or any other specified corporation”, for up to 5 years. Additionally, a listed company or its officer that has been found in breach of the Disclosure Requirements may be liable to pay compensation to persons who have suffered financial loss as a result of such breach under s. 307Z of the SFO.
Over the last 7 years, a number of enforcement actions have been initiated against listed companies and officers, with fines of up to HKD1.6 million being imposed on listed companies and their officers, and directors being disqualified.
We set out below a summary of some relevant enforcement actions to highlight the types of inside information not disclosed, the delay in disclosure and the sanctions imposed.