The regulator said it has commenced the civil proceedings against the directors – Richard Yin Yingneng, former chairman of First China, Wang Wen Ming and Lee Yiu Sun, current chairman and chief executive officer of First China – over alleged breaches committed resulting in an overpayment of a dividend of $18,692,000 to Fame Treasure Ltd in 2007.
In a statement, the SFC said the directors “breached their duties to the company resulting in First China distributing a further dividend of $18,692,000 to Fame Treasure Ltd, the seller in the 2007 acquisition by First China of GoHi Holdings Ltd (GoHi). Wang, the current Chairman of First China, was a majority shareholder of GoHi at the time via his stake in Fame Treasure Ltd.”
The SFC said that three defendants claim the distribution by First China, was part of a “mutual understanding and agreement between the parties” to the acquisition of GoHi. However, the regulator alleges that this understanding and agreement about the distribution did not exist and “as such both Fame Treasure” and, indirectly, Wang, were not entitled to the money.
Concluding the statement, the SFC said it is seeking court orders to disqualify Yin, Wang and Lee (or any of them) as company directors for such period as the court considers. As part of the legal proceedings, the SFC said it is also seeking court orders that First China and/or its relevant subsidiaries bring court proceedings against Fame Treasure and/or other parties to recover the amount of the dividend distributed as a result of the alleged misconduct.
