Tales from two potters

Carrie Lee

9.1 WITH the intriguing saga of the Interform Ceramics dispute involving competitor Siu-Fung Ceramics unfolding piece by piece, a whole range of new questions are being raised.

Interform listed on the stock exchange on May 12, in a controversial offer of 150 million shares at $1.22 each.

Yesterday Interform closed at 98 cents in a listing marred by an argument over whether or not the company was involved in mainland joint ventures.

Interform said it cancelled tentative arrangements to enter into two joint ventures. Siu-Fung contends this on behalf of the aggrieved mainland parties.

It has been pointed out that Interform should have submitted the contracts of its two mainland joint ventures to the stock exchange for inspection, even though they were later cancelled.

That would have been fully within the listing rules.


The rules say a listing candidate should submit for inspection ''the dates of and parties involved to all material contracts [not being contracts entered into in the ordinary course of business] entered into by any member of the group within the two years immediately preceding the issue of the listing document''.

It says this should be supplied ''together with a summary of the principal contents of such contracts and particulars of any consideration passing to or from any member of the group''.

Stock exchange executive director and head of listing Herbert Hui Ho-ming, said the rules only required ''material'' contracts to be produced.

Both he and a representative from sponsor Standard Chartered Asia said they were satisfied that the contracts in question did not constitute ''material'' contracts.


However, what does ''material'' mean? According to Standard Chartered Asia, there is not a clearly stated definition.

Maybe professionals in the industry know what that means, but to laymen a rule that is not well-defined can invite a multitude of interpretations, causing confusion and contention.


Stock investors may feel, therefore, less secure, doubting whether the level of disclosure of company information is arbitrarily judged to suit the interests of the listing parties and their financial advisers.