The Hong Kong Securities and Futures Commission (SFC) has reached a settlement agreement with Sino Wealth International Limited and Clear Prosper Global Limited.

The settlement covers what the Takeovers Executive considers to be breaches of The Codes on Takeovers and Mergers and Share Buy-backs by their parent company, Chow Tai Fook Nominee Limited (CTFN), and its concert parties (collectively, Relevant Concert Group), in relation to their dealings in the shares of Giordano International Limited.

Following an extensive investigation into Giordano’s shareholding structure, the Executive considers that two other shareholders of Giordano outside CTFN group have been acting in concert with CTFN group in acquiring or consolidating control over Giordano and accordingly their aggregate shareholdings and dealings in Giordano shares should have been taken into account for the purpose of the Codes.

On that basis, the Executive considers that as the Relevant Concert Group’s interest in Giordano shares crossed 30% on 18 May 2016, this triggered an obligation to make a general offer at HK$3.60 per share on the same day. However, no general offer was made for Giordano as required under Rule 26 of the Code on Takeovers and Mergers.

In addition, the Executive considers that there was a breach of Rule 5 of the Takeovers Code on 13 September 2022 in relation to the voluntary general offer (VGO) announced by Clear Prosper for Giordano at HK$1.88 per share in June 2022 because the VGO was declared lapsed on 13 September 2022 even though the only condition for the VGO had actually been fulfilled on the basis of the total number of voting rights represented by shares held by the Relevant Concert Group and valid acceptances received.

Under the settlement, Sino Wealth and Clear Prosper have agreed to make cash payment to independent shareholders who held Giordano shares as at the dates on which the above breaches are considered by the Executive to have taken place. Subject to the number of successful claims received, the maximum payment payable could potentially involve up to approximately HK$1.5 billion.

In agreeing to the settlement, the Executive has taken into account past decisions of the Takeovers and Mergers Panel involving failures to discharge the general offer obligation and compensation payments, the specific facts and circumstances of the current case, and the time and costs required for a disciplinary hearing before the Panel.