Investors who bought shares in troubled fabric maker Hontex International Holdings have little hope of getting their money back any time soon. The High Court yesterday decided against ordering the company to refund the HK$1 billion it raised through an initial public offering in December 2009.
Mr Justice Jonathan Harris ruled that any order to refund the money could only be made after a trial to determine if the company had committed misconduct.
He set a three-week trial for June of next year, which will allow the Securities and Futures Commission (SFC) and the company time to present their evidence and arguments to determine if any malpractice occurred that would require the firm to make compensation.
SFC lawyer Simon Westbrook argued in the court yesterday that a refund order could be granted immediately because Hontex had already admitted - in a company announcement last August - that financial figures in its listing prospectus were not reliable, and had concluded that investors should be granted compensation.
Westbrook also said that, as the Hontex management were either in Taiwan or on the mainland, any potential prosecution would be difficult, as the respective jurisdictions had no extradition arrangements with Hong Kong.
However, Hontex's lawyer rejected that argument, saying the SFC could not use the approach that 'we are the SFC and we can do what we want'.
Judge Harris concluded he was not comfortable ordering a refund, saying any decision would need to wait until after the trial next June. Alternatively, the SFC could take the case to the Market Misconduct Tribunal to determine the matter.