Hong Kong’s Securities and Futures Commission (SFC) has obtained an order from the Court of First Instance requiring Mr Andrew Liu, a former non-executive director of Arta TechFin Corporation Limited (known as Freeman Financial Corporation Limited at the material time), and Mr Quincy Hui Kwong Hei, former managing director of Arta TechFin, to compensate the company $57.5 million over the financial loss they caused from its acquisition and disposal of a stake in Liu’s Holdings Limited.

Liu and Hui were also disqualified from acting as a director or in any way being concerned with or taking part in the management of Arta TechFin and any other corporation, without leave of the Court, for eight years and six years respectively.

Notably, the Court found that Liu’s misconduct was the most serious whilst Hui played a major part in the above-mentioned transaction.

Seven other former executive directors and independent non-executive directors of the Arta TechFin – namely, Mr Lo Kan Sun, Ms Sue Au Shuk Yee, Mr Philip Suen Yick Luni, Mr Scott Allen Phillips, Mr Agustin V Que, Mr Gary Drew Douglas and Mr Peter Temple Whitelam – were disqualified by the Court for periods ranging from one to two years. They, together with Liu and Hui, were ordered to pay the SFC the costs of the legal proceedings.

The SFC commenced its legal proceedings under section 214 of the Securities and Futures Ordinance in October 2016, seeking court orders against them for breaching their directors’ duties related to the acquisition of a stake in Liu’s Holdings and its subsequent disposal within a few months in 2011, resulting in substantial losses for Arta TechFin.

The compensation and disqualification orders were made after the Court determined that Liu, Hui, along with the seven former executive directors and independent non-executive directors, were responsible for Arta TechFin’s business and affairs being conducted in an oppressive manner, involving defalcation, misfeasance or other misconduct against the company or its members, or unfairly prejudicial.

Regardless of whether they were executive or non-executive directors, they bore the same legal responsibility for managing Arta TechFin’s business, including the responsibility to scrutinise proposals that could directly impact the interests of shareholders.

It was further held that the lengths of the disqualification periods properly reflect each of their level of involvement and the severity of their misconduct.