State Council-controlled China Everbright Ltd yesterday apologised to the stock exchange for an 'unintentional breach' of listing rules last July while issuing share options to directors. The red chip said it had violated an exchange code on securities dealing by directors when it issued share options on June 16, 1997, one day before it announced it would pay $2.4 billion for a 20 per cent stake in Everbright Bank of China. Under the 'Model Code for Securities Transactions by Directors of Listed Companies', directors should not deal in their company's securities if they possess unpublished information of a price-sensitive nature. In this case, the imminent announcement of the acquisition of Everbright Bank the following day was therefore price-sensitive unpublished information. The red chip, which used to be called China Everbright IHD-Pacific, is under the control of Zhu Xiaohua, formerly a deputy governor of the mainland central bank and a protege of Premier Zhu Rongji. It is the listed flagship of State Council-controlled China Everbright Holdings and holds large stakes in International Bank of Asia, National Mutual Asia and Theme International Holdings. It also has a small stake in China Telecom (HK). As a remedy, the red chip said directors who were granted the options, totalling 50.15 million shares or 5.7 per cent of the company's then-issued share capital, had voluntarily surrendered all outstanding and unexercised options. They included chief executive Yi Zhenqiu and executive director Shao Zhengkang as well as independent non-executive directors Frank Chao Sze-bang, David Tung Wai and Charles Ng Ming-wah. 'The remedial measures have ensured that no director has personally benefited from the granting of such options,' China Everbright Ltd director Wang Taoguang said. 'The stock exchange has confirmed that no further action will be taken against the directors in view of the remedial measures,' he said. Mr Wang said non-executive directors Mr Chao and Mr Tung, who had already partially exercised their options for 60,000 shares and sold their shares for more than the exercise price, had made an ex-gratia payment to the company amounting to the net profit from the sale. Non-executive director Mr Ng, who exercised options on his entitlement of 60,000 shares, agreed to sell the shares on the open market over the next three days. He also agreed to bear all losses arising from the sale if the shares were sold at a price lower than the $12.60 exercise price. China Everbright Ltd fell 20 cents yesterday to $6.10.