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SFC seeks share repurchase order for independent minority shareholders of LET Group Holdings Limited and Summit Ascent Holdings Limited

Issue date: 2024-09-27 16:21:49

The Securities and Futures Commission (SFC) has commenced legal proceedings under section 214 of the Securities and Futures Ordinance (SFO) in the Court of First Instance to seek a share repurchase order to protect the interests of independent minority shareholders of LET Group Holdings Limited (LET) and Summit Ascent Holdings Limited (Summit Ascent) as a result of alleged misconduct of Mr Lo Kai Bong, chairman, executive director and controlling shareholder of both companies (Notes 1 to 3).

The share repurchase order would require Lo, LET and/or Summit Ascent to make an offer to purchase shares from both companies’ minority shareholders independent of Lo at a price and in a manner to be determined by the Court.

The alleged misconduct of Lo has resulted in the trading suspension of the shares of LET and Summit Ascent. Since it is uncertain as to whether and when the shares would be able to resume trading, the share repurchase order would provide an exit for independent minority shareholders.

As part of the legal proceedings, the SFC is also seeking a disqualification order against Lo for his misconduct towards members of LET and Summit Ascent.

The SFC’s investigation found that Lo deliberately disregarded the applicable Listing Rules and the requirements under the Code on Takeovers and Mergers (Takeovers Code) and caused both LET and Summit Ascent to enter into agreements to dispose of their assets in Russia in early 2024. The planned disposal of assets in Russia by both companies would have been considered a very substantial disposal under the Listing Rules. In particular, Lo:

• disregarded legal advice regarding non-compliance with the Listing Rules and the disapproval by the other directors of LET and Summit Ascent, who subsequently resigned as a result of the planned disposal of assets;
• caused LET and Summit Ascent to announce that the planned disposal of assets would proceed, without disclosing the non-compliance issues to the shareholders of both companies; and
• disregarded the regulatory concerns raised by the SFC and the SEHK regarding the non-compliance issues and continued to procure the two companies to proceed with the planned disposal of assets, resulting in the trading suspension of the shares of both companies under section 8(1) of the Securities and Futures (Stock Market Listing) Rules (Note 4).

Although the planned disposal of assets was terminated, the SFC alleges that Lo failed to, among other things, disclose all relevant material information to LET and Summit Ascent and their shareholders; apply reasonable skill, care and diligence in the performance of his duties as director of both companies; and ensure their full compliance with the Listing Rules and the Takeovers Code.

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Notes:

1. The shares of LET and Summit Ascent have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (SEHK) since 22 February 2007 and 10 January 1994 respectively. Summit Ascent is a subsidiary of LET, with 66.9% of its shares being indirectly held by LET. At all material times, LET and its subsidiaries, including Summit Ascent, were principally engaged in the development and operation of a resort in the Philippines; the operation of a hotel and gaming business in Russia; property development in Japan; and the management and operation of malls in mainland China.
2. Section 214(2)(d) of the SFO provides that the Court may order that a person found to be wholly or partly responsible for the company’s affairs having been conducted in a manner involving misfeasance or other misconduct towards it or its members, shall not be, or continue to be, a director, or in any way, whether directly or indirectly, be concerned, or take part, in the management of any corporation for a period of up to 15 years.
3. Section 214(2)(e) of the SFO provides that the Court may “make any other order it considers appropriate, whether for regulating the conduct of the business or affairs of the corporation in future, or for the purchase of the shares of any members of the corporation by other members of the corporation…”.
4. Please see the SFC’s press release dated 14 February 2024.

News captured as of:2024-09-27 16:21:49

Source: SFC