Compliance & Regulation

SFC publicly criticises CICC Financial Trading and China International Capital Corporation

The Securities and Futures Commission (SFC) has publicly criticised CICC Financial Trading (CICCFT) and China International Capital Corporation (CICCL) for breaches of the Code on Takeovers and Mergers (Takeovers Code).

In transactions related to mandatory general offers for the H shares of Dalian Port (PDA) Company and Maanshan Iron & Steel Company in 2019, China International Capital Corporation Hong Kong Securities Limited (CICCHKSL), a member of the China International Capital Corporation group (CICC Group), was the financial advisor to the offerors, says the SFC in a press release.

CICCFT and CICCL dealt in the relevant securities of Dalian Port and Maanshan Iron during the transactions but failed to make timely disclosure of their dealings in relevant securities under Rule 22 of the Takeovers Code.

CICCFT and CICCL accepted that they failed to comply with the Takeovers Code and agreed to the disciplinary action taken against them. In deciding the sanction, the SFC paid considerable regard to the prompt actions taken by CICC Group following the discovery of the breach. The SFC also considered CICC Group’s full cooperation and a number of measures which it has put in place to ensure future compliance.

The disclosure obligations in the Takeovers Code are intentionally onerous to reflect the fact that a high degree of transparency is essential to the efficient functioning of the market in the critical period of an offer or possible offer for a company’s shares. Timely and accurate disclosure of information in relation to relevant dealings, including those of advisers, plays a fundamental role in ensuring that takeovers are conducted within an orderly framework and the integrity of the markets is maintained.