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Agatha Ngai

Carrie Lee

IN the face of strong criticism from the Hong Kong Stock Exchange, Yu Pun-hoi yesterday resigned as chairman of Ming Pao Enterprise Corporation, the newspaper publishing group, and South Sea Development Company.

  But last night he said he would continue to contribute to the development of the two companies as majority shareholder.

  Through his private companies, Yu controls about 60 per cent of Ming Pao, which publishes Ming Pao Daily News.

 The departure from the two top jobs was the price he paid for concealing criminal convictions received in Canada. By not admitting to his criminal record in official documents, he broke the rules of the Hong Kong Stock Exchange, and yesterday its powerful listing committee strongly censured his actions.

  In the first censure of its type since listing regulations were amended in 1989, the committee ruled that Yu failed to apply such degree of skill, care and diligence as might reasonably be expected of a director of a listed company, and was therefore in breach of the listing rules.

  During the proceedings taken against him, Yu admitted that he 'negligently misled the Listing Division as to his criminal record'.

   His decision to stand down, despite earlier vows to fight on, followed his resignation from the chairmanship of the Newspaper Society of Hong Kong on Wednesday.

  His resignation, while voluntary, followed a recommendation by the stock exchange that he should quit. His decision to do so brought an end to the exchange's action. If he had fought on, he would have had to face a stock exchange hearing today.

  But while the exchange can rule that a director is not fit to be on the board of a company, it can do nothing to force the sale of shares in these circumstances. So it appears that Yu will continue to play a major, if back seat role at the companies.

   Yu found himself in the glare of controversy when it was revealed on October 10 that he had been jailed for a number of offences in Canada in 1979.

  He admitted the convictions - including theft, forging cheques and using other people's credit cards amounting to a total of C$4,600.

  However, he failed to include these in the Form B declarations and undertakings which he submitted to the listing division of the stock exchange in respect of directorships of Ming Pao, South Sea, and another company, Tristate Holdings, from which he has also resigned.

  It later emerged that he had previous convictions for theft, for which he was still on probation when he committed the other offences.

   'Yu acknowledges responsibility for his breach and has resigned his directorships of Ming Pao and South Sea with immediate effect,' said the exchange's secretary to the listing committee, Herbert Hui Ho-ming.

  Yu resigned from his non-executive directorship of Tristate on October 17, the exchange official said.

  'He accepts that his conduct falls short of the standards expected by the exchange and required under the exchange listing rules of a director of a listed company,' said Mr Hui.

  Yu admitted to his criminal record on October 10, as the stock exchange began to prepare to investigate the allegations, which had led to the suspension of dealings in Ming Pao shares for one day.

  Since then, Yu has been helping the stock exchange with its inquiries, during which he has had a chance to speak in his own defence. The division also prepared a report which included a recommendation for Yu to resign from the listed companies. The report was submitted for discussion at the stock exchange's listing committee meeting yesterday.

  Mr Hui yesterday said Yu admitted negligently misleading the listing division as to his criminal record. The stock exchange accepted his explanation of negligence, he said.

  Yu did not indicate he would appeal, according to Mr Hui, who said the exchange's announcement issued yesterday on Yu's resignation and the censure had been endorsed by Yu's legal consultant.

  'Yu's resignation from the boards of both companies is the best possible solution, as the listing rules do not actually give us the power to force directors to step down,' he said.

  'As a listed company's director he should have followed the rule and filled in clear and genuine information because investors' confidence in the companies' boards rely on the information. Any violation of the rule, either intentional or negligent, should be seriously and carefully dealt with,' said Mr Hui.

  He stressed the listing committee was not censuring Ming Pao, South Sea or Tristate or any members of their boards apart from Yu.

  He said the companies would not be suspended today because the stock exchange did not want shareholders to suffer.

  Ming Pao and South Sea yesterday accepted Yu's resignation and said their operation would not be affected.

  Asked whether Yu would be allowed to serve as a listed company's director in the future, Mr Hui said that would be considered case by case.

  Mr Hui said the issue conveyed a message in corporate governance.

  'Directors must be aware their duties to shareholders must be taken seriously,' he said, 'at the very least they must not be negligent.'   'The message to all directors is that you must be careful in your signing of important documents when you are a director of listed companies. Even if you are not careful that could be a censurable act under the listing rules,' he said.

  He said although the exchange would seek to make sure all information submitted to it was accurate, it would not amend its existing system unless further problems suggested this was necessary.

  This matter should be treated as an individual case and did not suggest the existing system had problems, he said.



YU quits Ming Pao Board