Chow Tai Fook-linked firms set for record US$192 million hit in Giordano case

In the largest settlement for a Takeovers Code breach in Hong Kong, the Securities and Futures Commission (SFC) has reached an agreement with two wholly owned subsidiaries of Chow Tai Fook Nominee (CTFN) – a company linked to the Henry Cheng Ka-shun family – requiring them to pay up to HK$1.5 billion (US$192 million) to independent shareholders of Giordano International.

The agreement with Sino Wealth International, Giordano’s majority shareholder, and Clear Prosper Global followed an investigation into share dealings dating back to 2016, which the regulator said involved breaches of the code by CTFN and parties acting in concert with it.

After examining Giordano’s shareholding structure, the SFC concluded that two additional shareholders – Best Sincere and Firstrate Enterprises, both outside the CTFN group – had been acting in concert with the group to acquire or consolidate control of the company.

Their combined shareholdings and dealings should therefore have been counted under the Takeovers Code, the regulator said in a statement on Monday.

Best Sincere first acquired Giordano shares on April 26, 2016. The investment holding company, incorporated in May 2005, was previously owned by a former director of companies within the CTFN group and is now held by his son.

Firstrate first bought Giordano shares about 18 years ago. Incorporated in October 2007, it has been held by another director within the CTFN group, according to the regulator.