News

Chunli Medical (1858) tries to justify taxed bonus issue
Company announcement, 23-Apr-2019
This follows a Webb-site complaint to HKEX on 21-Feb-2019. It is against shareholders' interests to send them bonus shares when that triggers a tax on the CNY1 par value of the new shares. The tax is deducted from a cash dividend, costing H-share owners RMB0.1. For domestic owners it is RMB0.2, which, with tax on the dividend, is more than the dividend, so they get no net dividend and owe the company money which it now asks them to pay!
Patrick Wong Ka Yan v Nicole Cheung Ka Yu (fka Cheung Lee Hung)
HK Court of First Instance, 23-Apr-2019
Man v ex-mistress, whom he met when she was a masseuse. He wants back the Wanchai flat he gave/lent her which was "near to his office in order to facilitate his visits to her". She claims her son is his. In separate proceedings, he is contesting the jurisdiction of the court to compel him to take a DNA test.
Wu Yinong resigns as INED of Jiu Rong (2358) following his SFC sanction
Company announcement, 17-Apr-2019
This comes 3 days after Webb-site complained to HKEX that the company had failed to announce that Mr Wu had been sanctioned by the SFC for his due diligence failures while sponsoring an IPO at China Merchants Securities. The sanction was announced by the SFC on 27-Feb-2019, 7 weeks before. The question is, why do we have to point these things out to HKEX?
SFC action is too little, too late for minority shareholders of Luxey (8041)
Webb-site.com, 14-Apr-2019
The SFC seeks disqualification of 2 ex-directors, but fails to seek any recovery of Luxey's HK$350m, 7-fold overpayment in an acquisition from an alleged nominee of then Chairman Joseph Lau. We first documented this case and numerous other suspicious transactions involving Luxey and other listed companies in a series of articles in 2012. This is the only one to see any action, and it falls far short of what is needed to provide a deterrent.
Brightoil (0933) Chairman Sit Kwong Lam declared bankrupt
HK Court of First Instance, 11-Apr-2019
So the CPPCC member automatically ceases to be a director, but Brightoil has not yet announced this. A Singapore supplier to Brightoil claimed US$30.3m on his personal guarantee.
SFC tells off Gordon Wu's father-in-law for cashing in early and failing to say so on time
SFC, 10-Apr-2019
Kwok Tse Wah is the father of Ivy Wu Kwok Sau-ping. He is quite possibly the oldest person ever to be sanctioned under the Takeovers Code.
Kingdee (0268) aborts acquisition from its Chairman of CloudHub
Company announcement, 4-Apr-2019
Citing "varying market interests" after the acquisition was announced, Kingdee "considers that this will allow management attention and resources to be devoted to other arising business initiatives and opportunies" - their real estate business, perhaps. No word on how the Chairman proposes to divide his attention between Kingdee and his private businesses or whether they will now repay debts to Kingdee.
SJ v Cheng Ka Yee & others
HK Court of Final Appeal, 4-Apr-2019
As we predicted last August, HK's highest court confirms that the Government has been overreaching by charging people with "obtaining access" to their own computers with criminal or dishonest intent. In such cases the Government must now prove the core offence rather than using the catch-all "but she used her computer/ smartphone/ smartwatch to prepare for an offence". You can't "obtain" something you already have.
Ex-assistant manager of Friends of the Earth charged with using fake credentials
ICAC, 2-Apr-2019
The moral: if you're going to fake your credentials, at least pick real qualifications. He allegedly claimed a Master's from HK Baptist University in a course they do not offer and associate membership of the Chinese Institute of Certified Public Accountants, a status they do not offer. It also appears that FoE doesn't bother to verify credentials.
Concentration warning in Xinchengyue (1755)
SFC, 2-Apr-2019
The top 20 holders have 92.82%. The IPO was priced at $2.90, the bottom of its range of $2.90-3.90, and only 3.6% of the offer was taken up by the public offer. 96.59% of the offer was taken by 25 placees. The stock is now 174% above the IPO price.
Felix Lok Man Fai v Architects Registration Board
HK Court of Appeal, 2-Apr-2019
Mr Lok succeeds because the Inquiry Committee of the ARB failed to give any reasons for its findings against him. The case is sent back to a new Inquiry Board. Incidentally, none of the disciplinary decisions of the ARB appears on its web site - the profession appears to conduct these matters in secret.
Henry Chan Hin Keung v Apple Daily Ltd & others: costs
HK District Court, 1-Apr-2019
The newspaper wins its costs in the unsuccessful defamation action against it.
ASTRI director charged with MIPO over purchase orders
ICAC, 29-Mar-2019
Of course, if the HK Government stopped throwing public money at private businesses, then the Innovation & Technology Fund and ASTRI would be shut down and there would be no such public office in which to misconduct oneself.
Ex-Centaline supervisor jailed over HK$1.2m kickback
ICAC, 28-Mar-2019
This almost certainly relates to Flat A on 46/F (the top floor) of 39 Conduit Road, which went for HK$594.76m or $107,435 per saleable sq ft. Nothing else on Conduit Road comes close to that price.
Webb reappointed to Takeovers Panel
SFC, 28-Mar-2019
He joined the Panel on 1-Apr-2001 and became a Deputy Chairman in 2013.
HKICPA fines BDO Ltd, Amos Li Wing Yin & Alvin Au Yiu Kwan HK$50k in total
HKICPA, 26-Mar-2019
Mr Au was also fined last June for his work at Baker Tilly on the 2006 audit of Egana, a US$1bn fraudulent company which collapsed following our whistle-blowing article in 2007. This time the fine relates to the audit of impairment of goodwill at Rosan Resources (0578) at 31-Dec-2012. Mr Li has since moved on to be a director of Moore Stephens CPA Ltd.
Hopewell and the lemon discount
Webb-site.com, 22-Mar-2019
What does the ability to take a company private for 57 cents on the dollar say about the future of HK's public market? Failure to reform HK's laws and regulations to improve the corporate governance framwork will see the market shrink over time as good companies stay away and controllers take existing companies private.
SFC fines BOCI Securities Ltd HK$10m for investment products selling practices
SFC, 18-Mar-2019
The Bank of China (3988) subsidiary allowed clients to upgrade their investment risk without justification and to achieve "high asset concentration" - more than 20% of net assets in one product - in the majority of transactions in the relevant periods.
Inside the Kingdee bubble
Webb-site.com, 18-Mar-2019
It appears to be a Shenzhen success story, conquering the World with the "Chinese management model", but we burn through the techno-fog of the disclosures and dig deep inside the accounts. You won't like what you see.

Our stories

SFC action is too little, too late for minority shareholders of Luxey (8041)
The SFC seeks disqualification of 2 ex-directors, but fails to seek any recovery of Luxey's HK$350m, 7-fold overpayment in an acquisition from an alleged nominee of then Chairman Joseph Lau. We first documented this case and numerous other suspicious transactions involving Luxey and other listed companies in a series of articles in 2012. This is the only one to see any action, and it falls far short of what is needed to provide a deterrent. (14-Apr-2019)
Hopewell and the lemon discount
What does the ability to take a company private for 57 cents on the dollar say about the future of HK's public market? Failure to reform HK's laws and regulations to improve the corporate governance framwork will see the market shrink over time as good companies stay away and controllers take existing companies private. (22-Mar-2019)
Inside the Kingdee bubble
It appears to be a Shenzhen success story, conquering the World with the "Chinese management model", but we burn through the techno-fog of the disclosures and dig deep inside the accounts. You won't like what you see. (18-Mar-2019)
Revealed: SFC probes Chairman, CEO of Hua Han Health (0587), freezes their accounts
The SFC has frozen accounts at 3 brokerages up to HK$3.81bn, the amount raised by HHH in 2015 in an open offer ($3.19bn) and a CB ($0.62bn) issued to Huarong (2799) and CCB (0939). The SFC suspects false or misleading statements and misappropriation of part of the proceeds. (16-Feb-2019)
A simpler, fairer tax system
There are calls for a rental deduction for HK salaries tax, to compensate for the mortgage interest deduction. Both miss the point. Governments should not use tax breaks to distort consumer choice. Give people unconditional higher personal allowances instead, and introduce a flat rate of tax above that. Also, abolish the tiered rate of profits tax and the R&D deduction, 2 gimmicks introduced by Carrie Lam. (30-Jan-2019)
Why stock-plunges happen so often in HK
We explain the 20-year history to a statutory loophole which keeps investors in the dark on share pledges. (24-Jan-2019)
Jiayuan (2768) Chairman should expect the SFC's call
After denying any knowledge of reasons for last Thursday's crash, Jiayuan now says that 3.73% of the Chairman's stake was dumped in a forced sale due to enforcement of share charges and/or margin financings. (23-Jan-2019)
Last chance to satirise the anthem
In case you've lost that lovin' feelin' for the Chinese markets. (10-Jan-2019)
Brexit and customs from a HK perspective
Theresa May has pursued 2 conflicting objectives: leaving the customs union; and keeping the UK/EU customs border open. HK people are used to a customs boundary with the rest of China, with no impact on sovereignty. Similarly, Northern Ireland should choose between remaining in the EU customs union post-Brexit with a boundary down the Irish Sea, or leaving the EU customs union and having a hard border with the Republic of Ireland. Only then can the UK or GB have independence in trade negotiations with other countries and deliver a proper Brexit. (17-Dec-2018)
Companies Registry illegally overcharged users HK$3.6bn
The CFA has ruled that Trading Funds must not seek distributable profit or pay "notional tax". Webb-site finds that the Companies Registry has overcharged users HK$3.6bn since 1998, making up to a 94% return on fixed assets against a target 5.7%. The illegal excess should now be returned by waiving fees, including scrapping the Great Paywall of HK on corporate information. It should not take another judicial review to do so. (19-Nov-2018)
41 endangered stocks
If HKEX proceeds with an ill-conceived Listing Rule change, companies with disclaimed audit reports for 2019 will be suspended and likely delisted, victimising minority shareholders. We now list those with disclaimed audits up to 30-Jun-2018 which would be affected if the rule applied today. Make your submission to stop this nonsense! (17-Nov-2018)

Other news

Chunli Medical (1858) tries to justify taxed bonus issue
Company announcement, 23-Apr-2019
This follows a Webb-site complaint to HKEX on 21-Feb-2019. It is against shareholders' interests to send them bonus shares when that triggers a tax on the CNY1 par value of the new shares. The tax is deducted from a cash dividend, costing H-share owners RMB0.1. For domestic owners it is RMB0.2, which, with tax on the dividend, is more than the dividend, so they get no net dividend and owe the company money which it now asks them to pay!
Patrick Wong Ka Yan v Nicole Cheung Ka Yu (fka Cheung Lee Hung)
HK Court of First Instance, 23-Apr-2019
Man v ex-mistress, whom he met when she was a masseuse. He wants back the Wanchai flat he gave/lent her which was "near to his office in order to facilitate his visits to her". She claims her son is his. In separate proceedings, he is contesting the jurisdiction of the court to compel him to take a DNA test.
Wu Yinong resigns as INED of Jiu Rong (2358) following his SFC sanction
Company announcement, 17-Apr-2019
This comes 3 days after Webb-site complained to HKEX that the company had failed to announce that Mr Wu had been sanctioned by the SFC for his due diligence failures while sponsoring an IPO at China Merchants Securities. The sanction was announced by the SFC on 27-Feb-2019, 7 weeks before. The question is, why do we have to point these things out to HKEX?
Brightoil (0933) Chairman Sit Kwong Lam declared bankrupt
HK Court of First Instance, 11-Apr-2019
So the CPPCC member automatically ceases to be a director, but Brightoil has not yet announced this. A Singapore supplier to Brightoil claimed US$30.3m on his personal guarantee.
SFC tells off Gordon Wu's father-in-law for cashing in early and failing to say so on time
SFC, 10-Apr-2019
Kwok Tse Wah is the father of Ivy Wu Kwok Sau-ping. He is quite possibly the oldest person ever to be sanctioned under the Takeovers Code.
Kingdee (0268) aborts acquisition from its Chairman of CloudHub
Company announcement, 4-Apr-2019
Citing "varying market interests" after the acquisition was announced, Kingdee "considers that this will allow management attention and resources to be devoted to other arising business initiatives and opportunies" - their real estate business, perhaps. No word on how the Chairman proposes to divide his attention between Kingdee and his private businesses or whether they will now repay debts to Kingdee.
SJ v Cheng Ka Yee & others
HK Court of Final Appeal, 4-Apr-2019
As we predicted last August, HK's highest court confirms that the Government has been overreaching by charging people with "obtaining access" to their own computers with criminal or dishonest intent. In such cases the Government must now prove the core offence rather than using the catch-all "but she used her computer/ smartphone/ smartwatch to prepare for an offence". You can't "obtain" something you already have.
Ex-assistant manager of Friends of the Earth charged with using fake credentials
ICAC, 2-Apr-2019
The moral: if you're going to fake your credentials, at least pick real qualifications. He allegedly claimed a Master's from HK Baptist University in a course they do not offer and associate membership of the Chinese Institute of Certified Public Accountants, a status they do not offer. It also appears that FoE doesn't bother to verify credentials.
Concentration warning in Xinchengyue (1755)
SFC, 2-Apr-2019
The top 20 holders have 92.82%. The IPO was priced at $2.90, the bottom of its range of $2.90-3.90, and only 3.6% of the offer was taken up by the public offer. 96.59% of the offer was taken by 25 placees. The stock is now 174% above the IPO price.
Felix Lok Man Fai v Architects Registration Board
HK Court of Appeal, 2-Apr-2019
Mr Lok succeeds because the Inquiry Committee of the ARB failed to give any reasons for its findings against him. The case is sent back to a new Inquiry Board. Incidentally, none of the disciplinary decisions of the ARB appears on its web site - the profession appears to conduct these matters in secret.
Henry Chan Hin Keung v Apple Daily Ltd & others: costs
HK District Court, 1-Apr-2019
The newspaper wins its costs in the unsuccessful defamation action against it.
ASTRI director charged with MIPO over purchase orders
ICAC, 29-Mar-2019
Of course, if the HK Government stopped throwing public money at private businesses, then the Innovation & Technology Fund and ASTRI would be shut down and there would be no such public office in which to misconduct oneself.
Ex-Centaline supervisor jailed over HK$1.2m kickback
ICAC, 28-Mar-2019
This almost certainly relates to Flat A on 46/F (the top floor) of 39 Conduit Road, which went for HK$594.76m or $107,435 per saleable sq ft. Nothing else on Conduit Road comes close to that price.
Webb reappointed to Takeovers Panel
SFC, 28-Mar-2019
He joined the Panel on 1-Apr-2001 and became a Deputy Chairman in 2013.
Previously on Webb-site.com
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