(Good whacking! This should send a strong warning signal to the management of S-chips, particularly, who are inclined to violate the law and corporate governance....)
Excerpts from a media release by the Monetary Authority of Singapore.
Singapore, 12 February 2015... The Monetary Authority of Singapore (MAS) has entered into a settlement agreement with Mr Huang Zhong Xuan (Huang), former chief executive officer (CEO) of China Sky Chemical Fibre Co., Ltd (China Sky), under which Huang will pay a civil penalty of $2.5 million for making misleading public disclosures and failing to make the required disclosures to the market thereby contravening the Securities and Futures Act (SFA).
Huang Zhong Xuan, ex-CEO who made misleading public disclosures. 2. Under the settlement, Huang will also make an offer to surrender 10% of his shareholding in China Sky, equivalent to 15,416,121 shares. The surrender or cancellation of Huang’s shares will increase the net asset value per share for existing China Sky shareholders. The offer is expected to be approved by China Sky’s board of directors. Huang has also undertaken not to assume the role of a company director or be involved in the management of any entity listed on the Singapore Exchange (SGX) for three years.
3. Huang has admitted to making misleading statements in announcements to the market relating to China Sky’s purchase and subsequent aborted acquisition of a piece of land in Fujian, China (Fujian Land), in contravention of Section 199(c) of the SFA. These include misleading disclosures relating to the use of the Fujian Land, incorrectly depicting the transaction counterparty as an independent third party when it was a related company, and providing a false reason for the delay in the transfer of the land use rights to China Sky’s subsidiary.
4. Huang has also admitted to contravening Section 203 of the SFA relating to China Sky’s failure to make prompt and proper disclosure to the market in relation to the Fujian Land acquisition. More details of Huang’s contraventions are included in the ANNEX.
5. The Commercial Affairs Department (CAD) commenced investigations in February 2012 for Huang’s contravention of the SFA provisions. CAD, in consultation with MAS and the Attorney General’s Chambers, subsequently agreed to discontinue criminal investigations so that the civil penalty settlement could take place.
6. The $2.5 million civil penalty will be paid from the US$3.7m in Huang’s Singapore bank account. The account was frozen under a High Court injunction that MAS obtained in 2013. The injunction prevented Huang’s assets from being dissipated, ensuring that there were sufficient funds in Singapore for the payment of the civil penalty.
7. MAS’ Assistant Managing Director (Capital Markets), Mr Lee Boon Ngiap, said, "MAS takes a strong stance against market misconduct and spares no effort in investigating possible transgressions. The offer by Huang to surrender 10% of his shareholdings in China Sky is the first negotiated settlement of its kind, directly benefitting existing shareholders of China Sky. We will continue to work closely with other statutory agencies to enforce the law against those who commit offences in our securities markets, whether they are based in Singapore or overseas.”
8. Mr Tan Boon Gin, Director of CAD, “Cases like this have jurisdictional issues that make case resolution challenging. This case has come to a successful resolution through close collaboration between MAS, CAD and SGX, as well as assistance rendered by the authorities and regulators in the People’s Republic of China. The settlement is a fair and equitable one which is commensurate with the severity of the breaches. It not only ensures that Huang is punished for his misconduct, but his offer to surrender his shares is a remedial measure that will benefit existing China Sky shareholders. We assure market participants that we will explore all viable avenues with the relevant agencies, including our overseas counterparts, to make wrongdoers account for what they have done.”
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