Hong Kong SFC Starts Legal Proceedings Against Former Chairman & Executive Directors of Tech Pro Technology Development for Failure in Supervision of Joint Venture Partner in Mainland China & Building in Shanghai with $41.3 Million Misappropriated
16th November 2023 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has started legal proceedings against the former Chairman & Executive Directors of Tech Pro Technology Development Limited (Li Wing Sang, Chiu Chi Hong, Liu Xinsheng) for failure in supervision of joint venture partner in Mainland China & a building in Shanghai with $41.3 million misappropriated (CNY 300 million) by the joint venture partner in Mainland China. Hong Kong SFC: “The SFC’s legal action follows an investigation which revealed that Li, Chiu and Liu had failed to properly manage Tech Pro’s investment in a joint venture with a partner in the Mainland and the principal asset of the joint venture was the sub-leasing right of a building in Shanghai. Specifically, the trio had failed to obtain sufficient control and supervision over the joint venture and left the daily management to the Mainland partner. As a result, the partner was able to misappropriate more than RMB300 million from the joint venture. The partner had also failed to settle the outstanding rent of the building in Shanghai with the result that a Mainland court ordered the termination of the joint venture’s sub-leasing right of the building, thus wiping out Tech Pro’s investment in the joint venture.” More info below:
“ Hong Kong SFC Starts Legal Proceedings Against Former Chairman & Executive Directors of Tech Pro Technology Development for Failure in Supervision of Joint Venture Partner in Mainland China & Building in Shanghai with $41.3 Million Misappropriated “
Hong Kong SFC Starts Legal Proceedings Against Former Chairman & Executive Directors of Tech Pro Technology Development for Failure in Supervision of Joint Venture Partner in Mainland China
14th November 2023 – 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 disqualification orders against former chairman and executive director of Tech Pro Technology Development Limited (Tech Pro), Mr Li Wing Sang, and former executive directors, Mr Chiu Chi Hong and Mr Liu Xinsheng (Notes 1 to 4).
The SFC’s legal action follows an investigation which revealed that Li, Chiu and Liu had failed to properly manage Tech Pro’s investment in a joint venture with a partner in the Mainland and the principal asset of the joint venture was the sub-leasing right of a building in Shanghai. Specifically, the trio had failed to obtain sufficient control and supervision over the joint venture and left the daily management to the Mainland partner. As a result, the partner was able to misappropriate more than RMB300 million from the joint venture. The partner had also failed to settle the outstanding rent of the building in Shanghai with the result that a Mainland court ordered the termination of the joint venture’s sub-leasing right of the building, thus wiping out Tech Pro’s investment in the joint venture. The SFC alleges that Li, Chiu and Liu were, at the material time, in breach of their duties owed to Tech Pro including, inter alia, duties of care, skill and diligence and duties to act in the best interest of Tech Pro (Note 5).
Notes:
- Tech Pro, together with its subsidiaries, were principally engaged in the manufacture and sale of LED lighting products and accessories. Tech Pro was listed on the Main Board of The Stock Exchange of Hong Kong Limited on 6 September 2007 and delisted on 2 March 2020.
- Under section 214 of the SFO, the court may, among other things, make orders to disqualify a person from being a director or being involved, directly or indirectly, in the management of any corporation for a period of up to 15 years, if the person is found to be wholly or partly responsible for the corporation’s affairs having been conducted in a manner, amongst other conduct, involving defalcation, fraud, misfeasance or other misconduct towards the corporation or its members.
- Since Liu resided in the Mainland when the legal proceedings began, the SFC had to obtain leave from the Court of First Instance to serve the petition in the proceedings on Liu in the Mainland and the SFC was informed in July 2022 that the petition was successfully served on Liu in May 2022.
- Li and Chiu have been bankrupt since 2019 and 2020 respectively.
- On 31 October 2023, the case was set down for trial at the Court of First Instance.
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