SFC censures BIT Mining Ltd (NYSE:BTCM) for breaches of the Takeovers Code
In relation to Loto Interactive Ltd (8198.HK), after BTCM handed control of itself to founder Vincent Law Man San by issuing super-voting preference shares to him for US$65k.
SFC publicly censures BIT Mining Limited for breaches of the Takeovers Code
Issue date: 2021-07-19 16:33:46
The Securities and Futures Commission (SFC) has publicly censured BIT Mining Limited (formerly known as 500.com Limited) (Note 1) for breaching the rules on special deals under the Code on Takeovers and Mergers (Takeovers Code).
On 28 January 2021, Loto Interactive Limited (Note 2) announced a proposed share subscription by BIT Mining which would trigger a mandatory general offer upon completion. During the offer period, BIT Mining issued 85,572,963 class A ordinary shares to Man San Law (Note 3) in February 2021, increasing his voting rights in BIT Mining from 3.78% to 19.9%. It subsequently issued 65,000 class A preference shares to Law in April 2021, which further increased his voting rights to 61.72%.
In both instances, the issue of shares to Law constituted special deals under Rule 25 of the Takeovers Code (Note 4) and they were completed without the consent of the Executive (Note 5). Moreover, BIT Mining did not obtain advice from its professional advisers on the Takeovers Code implications of these deals. BIT Mining accepted that it had breached the Takeovers Code, apologised for the breaches and consented to the disciplinary action taken against it.
The SFC reminds practitioners and parties who wish to take advantage of the securities markets in Hong Kong that they should conduct themselves in accordance with the Codes on Takeovers and Mergers and Share Buy-backs (Codes). This includes seeking professional advice as needed. Professional advisers should ensure that their clients understand and abide by the Codes. If there is any doubt about the application of the Codes, the Executive should be consulted at the earliest opportunity.
The Executive Statement can be found in the “Regulatory functions – Corporates – Takeovers and mergers – Decisions and statements – Executive decisions and statements” section of the SFC’s website.
- The American depositary shares of BIT Mining are listed on the New York Stock Exchange under the ticker symbol “BTCM”.
- The shares of Loto Interactive Limited (stock code: 8198) are listed on GEM of The Stock Exchange of Hong Kong Limited.
- Law is a director and shareholder of BIT Mining and a 0.3% shareholder of Loto.
- Rule 25 of the Takeovers Code provides that “[e]xcept with the consent of the Executive, neither the offeror nor any person acting in concert with it may make any arrangements with shareholders…, either during an offer or when an offer is reasonably in contemplation or for 6 months after the close of such offer if such arrangements have favourable conditions which are not to be extended to all shareholders”.
- The Executive Director of the SFC’s Corporate Finance Division or his delegate.