Sunac China’s chairman ordered back to school for breaching Hong Kong stock exchange rules

HKEX says Sun Hongbin and another Sunac director must take 26 hours of courses on exchange rules, compliance and directors’ duties after finding the two did not disclose some information in a 2015 takeover deal

PUBLISHED : Thursday, 26 October, 2017, 6:58pm
UPDATED : Thursday, 26 October, 2017, 10:53pm

The chairman of property developer Sunac China Holdings, Sun Hongbin, and another director have been ordered back to school for 26 hours by the Hong Kong stock exchange operator after it ruled the two had failed to meet full disclosure rules during a big takeover deal in January 2015.

Hong Kong Exchanges and Clearing said in a statement on Thursday that Sun and Wang Mengde would need to each attend 24 hours of training on stock exchange listing rules and compliance, director’s duties and corporate governance, and an additional two hours on the disclosure requirements under Chapter 2 of the listing rules.

The penalty relates to Sunac’s bid in January 2015 to buy a 49.25 per cent stake in Chinese property firm Kaisa Group Holdings for HK$4.55 billion (US$580 million). Kaisa was struggling with debt at the time and had defaulted on US-dollar bonds, and Sunac was seen as a potential rescuer.

At the time, Sunac and the sellers of the shares, who included Kaisa chairman Kwok Ying-shing, also signed a supplementary agreement, under which Sunac would pay the sellers HK$1.55 billion if the deal failed to go through. The sum was equal to the amount of the first payment Sunac was to have made for the deal.

However, Sunac and Kaisa did not disclose the supplementary agreement in joint statements to the exchange in February and again in May 2015, when the deal was abandoned. Additionally, Sun did not disclose it to Sunac’s board of directors, the exchange said.

“At the material time, Mr Sun and Mr Wang were (and are still) directors of the company. They had knowledge of the supplemental agreement but did not disclose the same to the board for its knowledge and/or approval,” the exchange statement said.

“Mr Sun signed the supplemental agreement without the board’s knowledge or approval, which is unacceptable. Each director is accountable to the company and its shareholders for his actions and must disclose and seek approval from the board before taking any actions that would affect the interests of the company and its shareholders,” the statement said.

“The joint announcement and termination announcement were inaccurate and incomplete, in all material respects, and misleading for they failed to mention the supplemental agreement,” it said.

The 26 hours of training must be completed in 90 days, in classes offered by the Hong Kong Institute of Chartered Secretaries, the Hong Kong Institute of Directors or others approved by HKEX, the exchange said.