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Fiduciary Duties: A Case Study on the Exchange’s Censure Against Ex-directors of Global Uin Intelligence
Global | Publication | 三月 2024
The Stock Exchange of Hong Kong Limited (Exchange) issued a public censure and Director Unsuitability Statement on 5 March against two former directors of Global Uin Intelligence Holdings Limited (Global Uin) for violating their fiduciary duties by misappropriating Global Uin’s IPO proceeds. They had also failed to cooperate in the investigation.
This enforcement action was jointly investigated by the Exchange and the Securities and Futures Commission (SFC), with the assistance of the Monetary Authority of Singapore. It serves as a real-life reminder on the significance of directors’ fiduciary duties, and is the second disciplinary action taken by the Exchange on directors’ breach of fiduciary duties in less than a month.1
Content
The Case In Brief
Shortly after the GEM listing, Global Uin made a payment of SGD 1 million for a purported IPO consultancy service in Singapore, which caused the actual listing expenses to materially exceed the estimate disclosed in the prospectus. The payment was procured by Mr Aris Goh Leong Heng and Ms Anita Chia Hee Mei (the founders, controlling shareholders and former executive directors of Global Uin) without proper disclosure or board approval.
During the investigation, the two ex-directors provided incomplete and misleading information in order to conceal their misconducts. It was later revealed by the SFC that the payment was subsequently rerouted to the pair’s joint bank account in Singapore for repayment of their debt owing to Global Uin. Their actions amounted to misappropriation of Global Uin’s assets.
The GEM Listing Committee found that Mr Goh and Ms Chia committed serious breaches of their fiduciary duties to Global Uin, and their duties of skill, care and diligence under GEM Listing Rues (GLR) 5.01, among other rules and undertakings. The two ex-directors were also found to be in conflict with their positions as directors and have acted dishonestly against the interests of Global Uin.
Public censure and Director Unsuitability Statement2 were imposed against Mr Goh and Ms Chia.
Key Messages
- Directors’ breach of fiduciary duties is one of the Exchange’s regulatory focuses as indicated by their recent enforcement actions. Fiduciary duties are the fundamental principles that underpin effective corporate governance of a listed company. Directors are reminded to diligently fulfil such duties at all times in the interests of the company, its shareholders and relevant stakeholders as a whole.
- The Global Uin case highlights the strategic collaboration between the SFC and the Exchange in combating misconducts. The two regulators will leverage on their complementary investigative powers and regulatory tools, and will readily engage in cross-jurisdictional investigations for purposes of maintaining market order.
Footnotes
1
Please refer to the Statement of Disciplinary Action dated 20 February 2024, “Exchange’s Disciplinary Action against Three Current Directors of Xinming China Holdings Limited (Stock Code: 2699)”, for another recent disciplinary action taken by the Exchange.
2
The Director Unsuitability Statement is a statement that, in the Exchange’s opinion, Mr Goh and Ms Chia are unsuitable to occupy a position as director or within senior management of Global Uin or any of its subsidiaries.
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