SFC criticises Gao Yunhong and Feng Xuelian for breaches of the Takeovers Code

They caused Steering Holdings Ltd (now FDB Holdings Ltd, 1826) to sell shares of CMBC Capital (1141) in "frustrating action" during an offer period triggered when Mr Ng Kin Siu acquired control of FDB from CMBC Capital Finance Ltd, which had enforced security over a loan to Mr Gao's holding company, Gentle Soar Ltd. We note that the CMBC shares were originally subscribed on 4-Jul-2018 using a loan from Gentle Soar, 5 weeks after Gentle Soar pledged its 70% holding in FDB to CMBC Capital Finance.

Further information

Executive Statement

SFC publicly criticises Gao Yunhong and Feng Xuelian for breaches of the Takeovers Code

Issue date: 2022-04-07 16:40:23

The Securities and Futures Commission (SFC) has publicly criticised Gao Yunhong and Feng Xuelian for breaching the no frustrating action rules under the Takeovers Code (Note 1).

An offer period commenced for Steering Holdings Limited on 13 May 2021 when an announcement was published by Masterveyor Holdings Limited. Between 27 May 2021 and 1 June 2021, a wholly-owned subsidiary of Steering disposed of certain listed securities held by it. Given that the disposals when aggregated were a discloseable transaction under the Listing Rules (Note 2) carried out during an offer period, they constituted a frustrating action which was subject to the requirements of the Takeovers Code (Note 3). 

The approval of Steering’s shareholders was not obtained nor was a waiver of the requirement to obtain shareholders’ approval (Note 4) sought from the Executive (Note 5). This was a clear breach of the Takeovers Code requirements.

Gao and Feng, the two directors of Steering who were substantially involved in the disposals, accepted that they breached the Takeovers Code and agreed to the disciplinary action against them. They admitted that the breaches arose as a result of their oversight and misunderstanding of the Takeovers Code requirements.

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 (the Codes), regardless of the position that they find themselves in. This includes seeking professional advice as and when 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.



  1. The Code on Takeovers and Mergers.
  2. The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.
  3. Rule 4 of the Takeovers Code provides that “once a bona fide offer has been communicated to the board of an offeree company or the board of an offeree company has reason to believe that a bona fide offer may be imminent, no action which could effectively result in an offer being frustrated, or in the shareholders of the offeree company being denied an opportunity to decide on the merits of an offer, shall be taken by the board of the offeree company in relation to the affairs of the company without the approval of the shareholders of the offeree company in general meeting. In particular the offeree company’s board must not, without such approval, do or agree to…(c) sell, dispose of or acquire assets of a material amount …”.
  4. Note 1 to Rule 4 provides that “the requirement of a shareholders’ meeting may be waived by the Executive if the offeror … agrees”.
  5. The Executive refers to the Executive Director of the SFC’s Corporate Finance Division or a delegate of the Executive Director.
News captured as of:2022-04-07 16:40:23

Source: SFC




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