Hong Kong SFC Criticised Founder Cheung Chi Shing for Failure to Obtain Regulatory Approval after Buying 4.32% of Financial Service & Investment Co. Styland Holdings with 31.84% Shareholdings and Triggering Mandatory Offer for All Shares & Convertible Bonds, Founded Styland Holdings in 1976
29th March 2023 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has criticised Styland founder Cheung Chi Shing for failure to obtain regulatory approval after buying 4.32% of financial service & investment Co. Styland Holdings (listed in Hong Kong Exchange) with a total of 31.84% shareholdings and triggering the mandatory offer (crossing 30% shareholdings) for all shares & convertible bonds. Cheung Chi Shing founded Styland Holdings in 1976. Hong Kong SFC: “Cheung acquired 30,623,172 shares or about 4.32% of the shareholding interest in Styland Holdings Limited on 5 July 2022. Upon the completion of these acquisitions, Cheung and his concert parties’ aggregate shareholding in Styland increased from 27.52% to 31.84%, triggering an obligation to make mandatory conditional general offers for all of Styland’s shares and outstanding convertible bonds … … Whilst Cheung and his concert parties have taken remedial measures to make the general offers, Cheung accepted that he had not obtained the required approval before triggering an obligation. Cheung submitted that the breach was unintentional and agreed to the disciplinary action taken against him.” See full statement below.
“ Hong Kong SFC Criticised Founder Cheung Chi Shing for Failure to Obtain Regulatory Approval after Buying 4.32% of Financial Service & Investment Co. Styland Holdings with 31.84% Shareholdings and Triggering Mandatory Offer for All Shares & Convertible Bonds, Founded Styland Holdings in 1976 “
Hong Kong SFC Criticised Founder Cheung Chi Shing for Failure to Obtain Regulatory Approval after Buying 4.32% of Financial Service & Investment Co. Styland Holdings with 31.84% Shareholdings and Triggering Mandatory Offer for All Shares & Convertible Bonds
SFC publicly criticises Cheung Chi Shing for breach of the Takeovers Code
28th March 2023 – The Securities and Futures Commission (SFC) has publicly criticised Cheung Chi Shing for his failure to obtain regulatory approval before triggering a mandatory general offer obligation, in breach of the Takeovers Code.
Cheung acquired 30,623,172 shares or about 4.32% of the shareholding interest in Styland Holdings Limited on 5 July 2022. Upon the completion of these acquisitions, Cheung and his concert parties’ aggregate shareholding in Styland increased from 27.52% to 31.84%, triggering an obligation to make mandatory conditional general offers for all of Styland’s shares and outstanding convertible bonds.
Four subsidiaries of Styland are licensed corporations under the Securities and Futures Ordinance (SFO). In the event the mandatory general offer became unconditional, Cheung and his concert parties would hold more than 35% of Styland’s shares and would be new substantial shareholders of the four licensed corporations. This required the SFC’s approval, which was not obtained.
Whilst Cheung and his concert parties have taken remedial measures to make the general offers, Cheung accepted that he had not obtained the required approval before triggering an obligation. Cheung submitted that the breach was unintentional and agreed to the disciplinary action taken against him.
The Executive expects persons who are actively engaged in the securities market to comply with the Codes. This includes seeking professional advice as and when needed. If there is any doubt about the application of the Codes, the Executive should be consulted at the earliest opportunity.
The Executive Statement can be found in the “Regulatory functions – Corporates – Takeovers and mergers – Decisions and statements – Executive decisions and statements” section of the SFC’s website.
Notes:
- The Code on Takeovers and Mergers.
- The shares of Styland Holdings Limited (stock code: 211), a Hong Kong-based investment holding company principally engaged in financial businesses, listed on the Main Board of the Stock Exchange of Hong Kong Limited in 1991.
- Pursuant to Rule 26.1 and Rule 13.5 of the Takeovers Code.
- The four subsidiaries are Ever-Long Futures Limited, Ever-Long Research Limited, Ever-Long Securities Company Limited and Ever-Long Capital Management Limited.
- A person shall not become and continue to be a substantial shareholder of a licensed corporation without first being approved by the SFC under section 132 of the SFO.
- To comply with the relevant requirements under the Takeovers Code and the SFO, Cheung and his wife transferred their entire shareholding interests in Styland to their three children. Cheung’s children and Kevonia Family Limited (Offeror) (a company held by Cheung’s children in equal shares) applied for, and were granted, the required approval. On 16 December 2022, the Offeror announced that it would make the Offers in accordance with Rule 26.1 of the Takeovers Code. The Offers were made by the Offeror on 20 January 2023, became unconditional on 3 February 2023 and closed on 17 February 2023.
- Note 4 to Rule 26.2 of the Takeovers Code requires an offeror to obtain all relevant regulatory approvals before triggering an obligation to make a general offer.
- The Executive refers to the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director.
- The Codes on Takeovers and Mergers and Share Buy-backs.
Styland’s Founder, Mr. Cheung Chi Shing
Styland’s Founder, Mr. Cheung Chi Shing, was born in Hong Kong and is the only son in his family. During his childhood, he grew up in chicken huts in Kwun Tong, Hong Kong. Having grown up in a deprived family, Mr. Cheung had to take a part-time job while he was attending secondary school, and studied Chinese literature and history on his own in the evenings.
In 1976, Mr. Cheung established Styland (Hong Kong) Enterprises Limited with his $6,000 savings. Due to the tight budget at the beginning, he set up a home office for his trading business to save on rental expenses. Styland weathered the storms of various changes before it established an office at Belgian Bank Building in Mong Kok at a rent of $1,600. By obtaining letters of credit issued by banks, Mr. Cheung established goodwill for his business and made his first fortune. In 1979, upon the conclusion of a trade fair in Eastern Europe organized by the Hong Kong Trade and Development Council, Mr. Cheung extended his business trip and travelled around in countries including Poland, Yugoslavia, Romania, Hungary and the former East Germany to develop key business relationships for Styland.
In 1985, having successfully expanded his wealth, Mr. Cheung had stepped down and studied at home for a year. Mr. Cheung then came back to his business in 1987, and with his strong ambition, he started to engage in electronic trade, real estate, financial investment and a toll road project in China.
On 18 June 2002, Mr. Cheung announced his retirement. Nowadays, Mr. Cheung enjoys spending time fishing, reading and studying literature with friends, as well as vacationing throughout China.
The Styland Group
The Styland Group was established in 1977 by its founder Mr. Cheung Chi Shing. The Group achieved a major milestone in 1991 with the successful listing of its holding company Styland Holdings Limited on the Main Board of The Stock Exchange of Hong Kong Limited (SEHK Stock Code: 0211). Styland’s core businesses comprise of financial services as well as property development and investment.
The Group, through its wholly-owned subsidiary Ever-Long Securities Company Limited, Ever-Long Capital Management Limited and Ever-Long Finance Limited, offers stock broking, margin financing, corporate financing, asset management as well as mortgage financing services to clients. With Hong Kong’s position as an international finance center and with the PRC’s positive market conditions for business development, the Group will take advantage of such favorable factors for its high-growth development. In view of the strong fundamentals of the Hong Kong property market, the Group had invested in a number of high-grade properties in Hong Kong. The Group strives to invest in properties that yield a good return on investment. Currently, the Group holds a portfolio of Hong Kong properties that comprises a prime real estate in Fei Ngo Shan, New Territories, Hong Kong, and the Ocean View Lodge property in Sai Kung, New Territories, Hong Kong.
The Group keeps exploring other new business developments. The Group is strongly committed to fulfill its corporate social responsibility. As a good corporate citizen, the Group consistently upholds the values of its founder Mr. Cheung Chi Shing, to care for the community, the environment, and its employees. To this end, the Group contributes positively to society, the environment and the Group’s employees by participating in a variety of socially responsible initiatives on an on-going basis.
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