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SFC publicly criticises Gold Dragon Worldwide Asset Management Limited for breaches of Takeovers Code

Issue date: 2022-10-28 16:35:19

The Securities and Futures Commission (SFC) has publicly criticised Gold Dragon Worldwide Asset Management Limited for its failure to disclose dealings in the shares of Shanghai Dongzheng Automotive Finance Co., Limited in contravention of the Code on Takeovers and Mergers (Takeovers Code).

Between 12 March 2021 and 14 April 2022, Gold Dragon, acting as the investment manager of Seahawk China Dynamic Fund, executed 53 trades in Shanghai Dongzheng’s H shares during an offer period (Note 1) and failed to disclose these dealings as required by Rule 22 of the Takeovers Code (Note 2). Gold Dragon owned or controlled more than 5% of Shanghai Dongzheng’s issued H shares at the relevant time and was therefore an associate of Shanghai Dongzheng (Note 3).

The Takeovers Executive (Note 4) considers that Gold Dragon, as a fund manager, should put appropriate and adequate compliance systems in place to ensure compliance with all applicable regulatory requirements. As such, the breaches merit disciplinary action.

Gold Dragon accepted that it breached the Takeovers Code and agreed to the disciplinary action taken against it. It has implemented enhancements and remedial measures to ensure future compliance with the Takeovers Code.

The SFC reminds practitioners and parties who wish to take advantage of the securities markets in Hong Kong that they should conduct themselves in matters relating to takeovers and mergers in accordance with the Takeovers Code. In particular, associates must report their dealings in the relevant securities of the offeree company (and of the offeror company in the case of a securities exchange offer) during an offer period in accordance with Rule 22 of the Takeovers Code.

A copy of the Executive Statement can be found in the “Takeovers and Mergers – Decisions and statements – Executive decisions and statements” section of the SFC website.

End

Notes:

1. An offer period for Shanghai Dongzheng commenced on 3 February 2021 when it announced a possible sale of 71.04% of the total issued share capital held by its controlling shareholder.
2. Rule 22.1(a) of the Takeovers Code provides that “[d]ealings in relevant securities by an offeror or the offeree company, and by any associates of either of them, for their own account during an offer period must be publicly disclosed”.
3. The Takeovers Code defines an “associate” to include “a person who owns or controls 5% or more of any class of relevant securities issued by an offeror or the offeree company, including a person who as a result of any transaction owns or controls 5% or more”.
4. This refers to the Executive Director of the SFC’s Corporate Finance Division or his delegate.

News captured as of:2022-10-28 16:35:19

Source: SFC