SFC wins Privy Council ruling in Shun Ho case
THE Privy Council has ruled in favour of the Securities and Futures Commission (SFC) in its case against William Cheng Kai-man over dealings in shares of Shun Ho Resources.
On Monday, the council allowed the appeal by the SFC Takeovers Panel against the Court of Appeal of Hong Kong, which had quashed the panel's decision on grounds of alleged bias because of the involvement of a merchant banker in the inquiry into Mr Cheng.
SFC spokesman Bill Weeks said the commission was pleased with the Privy Council's decision.
However, the decision by the takeovers panel against Mr Cheng and related orders for him to compensate Shun Ho shareholders would not be implemented immediately.
The SFC said it was still subject to a further appeal by Mr Cheng against Mr Justice Kaplan's decision to refuse him leave for judicial review.
The court stayed this appeal when it made the decision, now reversed by the Privy Council.
'The commission will now seek to resolve this appeal as quickly as possible, in the interests of the investors who should be compensated under the panel's decision,' the SFC said.
The panel had severely censured Mr Cheng for not making a takeover offer for Shun Ho in late 1988 after he raised his interest in the firm above the 35 per cent threshold.
He was ordered to pay compensation of about $50 million to Shun Ho shareholders who should have received a general offer.
Otherwise, he would face a 'cold-shoulder' action by the SFC.
Under such an action, the services of dealers and advisers, including brokers and merchant bankers, would be withheld from Mr Cheng for a set period.
The commission said the council's ruling restored the decision of Mr Justice Liu in the High Court, which ruled in favour of the panel and the SFC.
'It removes any question about the propriety of the panel's proceedings,' it said.
In February last year, Mr Justice Liu ruled against Mr Cheng and supported the decision of the takeovers panel.
In May last year, the Court of Appeal said the panel had abused its discretion by allowing one of its members, Stephen Clark, a partner of Anglo-Chinese Corporate Finance, to appear to accuse Mr Cheng and then to judge him by sitting on the panel.
The SFC then took the case to the Privy Council instead of reconvening an inquiry on Mr Cheng's dealings in Shun Ho shares, because the court ruling would have a bearing on the structure of the Takeovers and Mergers Panel and other cases.