The Securities and Futures Commission (SFC) has publicly censured and imposed a 24-month cold-shoulder order (Note 1) against So Yuk Kwan for breaching the mandatory general offer obligation under the Takeovers Code (Note 2).

So was the chairman, executive director and chief executive officer of AV Concept Holdings Limited when the breaches took place. In 2016, So advanced loans to a borrower, who transferred 25,000,000 shares in AV Concept to So’s nominee on 8 June 2017 as repayment. As a result of the transfer, So’s interest in AV Concept increased from 2.38% to 5.61% while the interest of So and his concert parties (Concert Group) increased from 35.61% to 38.84%.

The Concert Group continued to acquire shares in AV Concept up until 27 April 2018 and these acquisitions were also in excess of the 2% creeper.

So told the Executive (Note 3) that he was unaware that the shares held by his nominee would count as his own interest under the Takeovers Code. He accepted that he has breached the Takeovers Code and deprived AV Concept’s shareholders of the right to receive a general offer for their shares. So agreed to the current disciplinary action against him.

Parties who wish to take advantage of the securities markets in Hong Kong should conduct themselves in matters relating to takeovers, mergers and share buy-backs in accordance with the Takeovers Code. So’s conduct fell short of the expected standards and disregarded one of the most fundamental provisions of the Takeovers Code. This merits the present disciplinary action.