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SFC obtains landmark court decision for former Combest senior executives to make $192 million compensation to shareholders

Issue date: 2025-06-02 19:02:58

The Securities and Futures Commission (SFC) has obtained orders in the Court of First Instance for a record compensation in the form of special dividend to public shareholders of Combest Holdings Limited (Combest) and to disqualify a shadow director, Mr Ng Kwok Fai, and two former executive directors, Mr Liu Tin Lap and Mr Lee Man To, of the now delisted company for their misconducts (Notes 1 and 2). 

The court order was granted following a first-of-its-kind settlement secured by the SFC for the trio to pay about $192 million to an administrator jointly appointed by the SFC and Combest for redistribution as special dividends to independent public shareholders. 

Furthermore, Ng was disqualified for 12 years, and Liu and Lee for eight years respectively, from being a director, liquidator, receiver or manager, and being involved in the management of any corporation. They were also ordered to pay the SFC’s costs in the proceedings (Notes 3 and 4).

“This court decision underscores the SFC’s power to hold de facto controllers of listed companies accountable for their misconducts, ensuring they face repercussions for their wrongdoings,” said Ms Julia Leung, the Chief Executive Officer of the SFC. “The provision of direct compensation to affected shareholders marks a pioneering step, demonstrating the SFC’s unwavering devotion to exploring all avenues to achieve the most fair and efficient resolutions to protect the investing public.”

The SFC’s investigation revealed that, at the material time, Liu and Lee acted upon Ng’s directions and instructions to operate and manage the affairs of Combest. Together, the trio orchestrated the acquisition of two subsidiary groups that were substantially overvalued by $229 million in 2016 and 2017, as well as payments of fictitious loan interests and fees totalling $64 million to entities related to Ng, and grossly inflated Combest’s revenue artificially generated by entities related to Ng across various accounting periods between 2016 and 2019. 

The Court found that, among others:

• the misconduct and breaches of duty established against Ng fall within the top bracket in terms of seriousness.
• Liu and Lee actively and knowingly assisted Ng and hence a disqualification period falling towards the top end of the middle bracket is appropriate.
• the compensation scheme is in the public interest as it would ensure independent public shareholders of Combest are compensated.

Bruno Arboit of Kroll (HK) Limited, who has been jointly appointed by the SFC and Combest as the administrator, will implement the compensation scheme and administer the distribution of the special dividends to Combest’s independent public shareholders as at the date when the funds are deposited in the administrator’s bank account. The administrator will contact the relevant shareholders of Combest in due course. Combest’s shareholders may contact the administrator at its email DL.combestholdingslimited@kroll.com or its hotline at (852) 2281 0108 if they have any queries.

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Notes:

1. In May 2020, the SFC commenced the court proceedings under sections 212 and 214 of the Securities and Futures Ordinance to seek remedies from Ng, Liu and Lee for their wrongdoings. Please see the SFC’s press release dated 21 May 2020.
2. In September 2024, the SFC and Combest, Ng, Liu and Lee have reached an agreement to dispose of the court proceedings by way of the Carecraft procedure. Please see the SFC’s press release dated 16 September 2024.
3. Two shareholders hold 24.4% of Combest have agreed to forfeit their entitlement to their share of the special dividends, resulting in a 32.3% increase in the special dividends payable to independent public shareholders. The independent public shareholders will receive $0.066 per share, which is 2.75 times higher than the last closing price Combest’s shares before suspension on 29 May 2019.
4. The judgement is available on the Judiciary’s website (Case No.: HCCW 118/2020).

Source: SFC