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Enoch Yiu

The stock exchange listing committee publicly criticised Chinese medicine retailer Nam Pei Hong (Holding) and three former directors for failing to disclose the sale of a controlling stake in the company in July last year.

 Nam Pei Hong, its former chairman Charles Chan Kwok-keung and former executive directors Ken Cheung Kwok-wah and Tse Cho-tseung, have written to the exchange to apologise for the incident and confirm it will not happen again.

 Mr Chan, Mr Cheung and Mr Tse issued a public announcement yesterday to apologise for their behaviour.

 The apology may have been a factor in the exchange's disciplinary decision, which falls short of a public censure.

 In July last year, Nam Pei Hong controlling shareholder International Tak Cheung Holdings (ITC) and subsidiary Paul Y-ITC Construction Holdings sold their 33 per cent Nam Pei Hong stake for $151.5 million.

 The buyer was Victory Hunter Holdings, owned by Yau Wai Ming, of the Heilongjiang government.

 A week before the transaction was announced on July 30, 1997, Nam Pei Hong's share price and turnover rose significantly.

 The firms shares were suspended after a 30 per cent one-day surge on July 23, having risen 50 per cent in the previous two trading days.

 The listing committee found there were meetings between Mr Yau and representatives of International Tak Cheung prior to the sale being announced.

 The listing committee considered the meetings were related to the price movements of Nam Pei Hong and the company had not disclosed the information, although speculation had driven its share price up.

 The committee found Nam Pei Hong in breach of its obligations under paragraphs two and 39 of the listing agreement for failing to disclose price-sensitive information in a timely manner.

 It also found the three former directors - Mr Chan, Mr Cheung and Mr Tse - were to blame for the breach.

 The exchange said: 'The listing committee considers the handling of the disclosure of such meetings to and the sale by the then management of Nam Pei Hong to shareholders and the investing public to be poor and unsatisfactory. The listing committee is highly critical of the conduct of the relevant individuals [Chan, Cheung, and Tse] in permitting the breach to occur.'  In a public announcement in today's South China Morning Post Mr Chan, Mr Cheung and Mr Tse 'apologise unreservedly', expressing 'profound regret'.

  The three also 'fully withdraw all allegations made against members of the listing committee'. Nam Pei Hong had, in August, unsuccessfully attempted to block the exchange's action.



Exchange raps Nam Pei Hong over sale