(A) Introduction
In a landmark move, the Stock Exchange of Hong Kong Limited (the “Exchange”) took disciplinary action against two former directors of TOMO Holdings Limited (“TOMO”), marking the first-ever enforcement action for failure to cooperate in investigations conducted by the Securities and Futures Commission (the “SFC”) and the Exchange.[1][2]
This action highlights the strengthened strategic collaboration between the SFC and the Exchange in enhancing investigative efficiency and enforcement effectiveness, leveraging the Exchange’s disciplinary powers under the Listing Rules to ensure fair regulatory outcomes.
(B) Regulatory Framework for Investigations
SFC Investigations
Under Section 183(1) and Section 183(2) of the Securities and Futures Ordinance (the “SFO”), the SFC is entitled to request individuals under investigation to produce relevant records/documents, provide explanations, attend interviews, answer questions, and assist with investigations.
Failing to comply with such requests without reasonable excuse constitutes an offence under Section 184(1) of the SFO. The person is liable to (i) on conviction on indictment to a fine of $200,000 and to imprisonment for 1 year; or (ii) on summary conviction to a fine at level 5 and to imprisonment for 6 months.
Providing false or misleading information intentionally or recklessly during investigations is also an offence under Section 184(2) of the SFO. The person is liable to (i) on conviction on indictment to a fine of $1,000,000 and to imprisonment for 2 years; or (ii) on summary conviction to a fine at level 6 and to imprisonment for 6 months.
The Exchange Investigations
Under Rules 3.09C and 3.20 of the Listing Rules, directors of listed issuers are obliged to (i) cooperate in any investigation conducted by the Listing Division (the “Division”) and/or the Listing Committee (the “Committee”) or the SFC; (ii) promptly and openly answer any questions addressed to the directors; and (iii) provide up-to-date contact information to the Exchange for a period of three years from the date on which each director ceases to be a director, failing which any documents / notices sent by the Exchange or the SFC to the last known address on record shall be deemed to have been served on the director.
In addition, under Rules 2A.09 and 2A.10 of the Listing Rules, the Exchange may impose disciplinary sanctions against various parties involved with listed issuers, including directors, senior management, substantial shareholders, professional advisers, employees of advisers, guarantors and parties with undertakings or agreements with the Exchange. Possible sanctions include:
(1) Private reprimands, public criticism or censure;
(2) Public statements questioning an individual’s suitability for their role;
(3) Market denial or suspension of trading;
(4) Cancellation of listing;
(5) Bans on professionals or individuals from representing parties before the Exchange;
(6) Reporting breaches to regulators or authorities;
(7) Remedial or corrective orders;
(8) Any other actions deemed appropriate, including public disclosures.
(C) Facts of the Case
The SFC initiated an investigation into potential contraventions of the SFO involving TOMO and its connected parties and issued notices to Ms Ma Xiaoqiu (“Ms Ma”) , former executive director and chairlady of TOMO and Mr Jin Lailin (“Mr Jin”), former independent non-executive director of TOMO, requesting relevant information and documents under Section 183 of the SFO. Both failed to respond to the SFC’s notices. The SFC referred the matter to the Exchange for action under the Listing Rules.
Meanwhile, the Division was investigating whether Ms Ma and Mr Jin had discharged their duties and obligations under the Listing Rules. Neither responded to the above investigation either.
(D) The Committee’s Findings
The Committee found that:
(1) Ms Ma and Mr Jin breached the Listing Rules by failing to cooperation with the Division and the SFC in their respective investigations.
(2) Their failure to discharge their responsibilities under the Listing Rules was serious.
As a result, the Exchange publicly censured Ms Ma and Mr Jin, stating they are unsuitable to occupy positions as directors or within senior management of TOMO or any of its subsidiaries.
(E) Key Takeaways
This case represents the Exchange’s first enforcement action targeting ex-directors for non-cooperation in joint investigations with the SFC, indicating a shift towards stricter enforcement of directors’ responsibilities. It underscores that directors should cooperate with the SFC and the Exchange in their investigations, even after leaving their roles. It also serves as a stark reminder that non-cooperation with investigations will face strict sanctions, reinforcing the importance of transparency and accountability in maintaining market integrity.
[1] https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/enforcement-news/doc?refNo=25PR122#
[2] https://www.hkex.com.hk/News/Regulatory-Announcements/2025/250812news?sc_lang=en
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