SFC obtains court orders against ex-director and CFO of Changgang Dunxin Enterprise (ex-2229)

He is ordered to pay HK$163m "misappropriated" by the ex-Chairman, plus interest and costs, and disqualified from directorships for 10 years. We doubt that he will ever pay though, as he didn't attend the hearing and is probably not in HK. The SFC has been unable to serve its petition in the Mainland against 3 other directors including the ex-Chairman.

Further information


SFC obtains court orders against former director and chief financial officer of Changgang Dunxin Enterprise Company Limited

Issue date: 2024-04-08 17:29:12

The Securities and Futures Commission (SFC) has obtained compensation and disqualification orders in the Court of First Instance against Mr Chen Ruomao, a former executive director and chief financial officer (CFO) of Changgang Dunxin Enterprise Company Limited (Changgang Dunxin Enterprise) (Notes 1 and 2).

Chen was ordered to pay a sum of $163 million with interest as compensation to Changgang Dunxin Enterprise following findings of his misconduct uncovered by the SFC in its investigation (Notes 3 and 4).

The SFC found that Chen allowed the proceeds of Changgang Dunxin Enterprise’s share placement in 2015 and bond placement in 2016 totalling $163 million to be misappropriated by the former chairman and executive director of the company. He went on to take steps to conceal the misappropriation from the auditors, the audit committee and the board of the company by providing falsified records purporting to show that the chairman had returned the net proceeds raised to the company. In addition, Chen was responsible for the overstatement of the cash and bank balance in Changgang Dunxin Enterprise’s financial statements and for the company giving false or misleading information regarding the intended use of the net proceeds in its share and bond placement announcements.

Although the Court agreed with the SFC that there is no evidence to suggest that Chen has received any of the misappropriated funds, the Court said that given “the very serious nature of Chen’s misconduct including, his conduct in concealing the misappropriation of funds and failing to alert the auditors, the audit committee and the board, which led to the company not being able to take step to recover the $163 million misappropriated funds from the former chairman and executive director, it is appropriate and just for the Court to make the compensation order of $163 million with interest.”

Chen was also disqualified from acting as a director, liquidator, receiver, manager, or being involved in the management of any listed or unlisted corporation for a period of 10 years. He was further ordered to pay the SFC’s costs in the proceedings.

The SFC’s Executive Director of Enforcement, Mr Christopher Wilson, said: “Rather than reporting and rectifying the misconduct by the former chairman, Chen knowingly assisted the concealment of the chairman’s misappropriation of funds by falsifying financial records. He has failed, in his capacity as the executive director and the CFO, to safeguard the assets of the company and ensure proper transparency, accountability and integrity of the company’s financial position.”

“The Court’s decision to order Chen to compensate the company for the entire amount misappropriated by the chairman, even though he did not receive any of the misappropriated funds, serves as a stern warning that those who commit corporate misconduct, as well as those who allow and perpetrate it, will be held accountable for their actions. The absence of personal financial benefits does not absolve one from being complicit in the misconduct.” Mr Wilson added, “This case underscored the SFC’s commitment to upholding the highest standards of corporate governance and reinforcing a corporate culture of integrity and individual accountability that are instrumental in fostering investor confidence and ensuring sustainable business growth.”

The SFC’s proceedings against three other former directors of the company are ongoing.



  1. Changgang Dunxin Enterprise was listed on the Main Board of the Stock Exchange of Hong Kong Limited (SEHK) on 26 June 2014 until its listing status was cancelled by the SEHK with effect from 16 October 2019. The company is currently in liquidation.
  2. The SFC commenced legal proceedings in September 2019 under section 214 of the Securities and Futures Ordinance against Zheng Dunmu (former chairman and executive director of the company), Zheng Dunqian (former chief executive officer and executive director of the company), Chen and Ye Deshan (former independent non-executive director of the company) for disqualification and compensation orders. Since all of them are residing in the Mainland, the SFC had obtained leave from the Court to serve the petition filed on 12 September 2019 on them in the Mainland but only Chen could be successfully served to date.
  3. Chen is ordered to pay the amount of $163 million together with interest at HSBC prime lending rate plus 2% from the date of the petition to the date of the judgment and, thereafter, at judgment rate.
  4. The judgment dated 28 March 2024 is available on the Judiciary’s website (Case number: HCMP 1462/2019).
News captured as of:2024-04-08 17:29:12

Source: SFC



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