Key Regulatory Updates for Hong Kong Listed Companies — September/October 2025

Introduction

The key updates in September and October 2025 were dominated by enforcement activity and board governance themes. The Stock Exchange of Hong Kong Limited (the Stock Exchange) issued a series of disciplinary decisions, highlighting core director duties — including accurate disclosure at IPO, rigorous supervision of operations and collateral enforceability, timely classification and announcement of notifiable transactions, and strict adherence to Listing Rules. 

In parallel, the Takeovers Bulletin (Issue No. 74) published by the Securities and Futures Commission (SFC) provided practical guidance on redactions for documents on display, disclosure of dividend adjustments to offer prices, and amendments to Practice Note 9’s “fast-track” eligibility considerations for exempt fund manager and exempt principal trader status. Collectively, these developments reinforce regulatory expectations around proactive board oversight and transparency, particularly for higher-risk activities and post-listing use of proceeds.

Disciplinary Actions by the Stock Exchange for Failure to Comply With Disclosure Requirements

1. Disciplinary Action Against Two Former Directors of Universal Star (Holdings) Limited (Delisted) (October 2025)

Key Points

Directors of a listing applicant are primarily responsible for the accuracy and completeness of the listing documents. They must not hide material financial liabilities or other material information from the sponsor and investors. When in doubt, they should consult the sponsor in a timely manner. Directors also owe fiduciary duties to the issuer. They must safeguard the issuer’s assets, take steps to avoid conflicts of interest, and act in the interests of the issuer and its shareholders as a whole. They must also procure the issuer’s compliance with the Listing Rules.

The Stock Exchange imposed a prejudice to investors’ interests statement and censured against Lu Qingxing (Mr. Lu), former non-executive director of Universal Star (Holdings) Limited (the Company), and Lyu Zhufeng (Mr. Lyu), former executive director of the Company.

Facts

• Between April 2017 and April 2019, prior to the Company’s listing, Mr. Lu borrowed approximately RMB 49 million on 13 occasions (the Loans).
• Mr. Lu procured the group’s major subsidiary, Ningde Xingyu Technology Co., Ltd. (the Subsidiary), to act as co-borrower or guarantor of the Loans.
• Almost all the Loan proceeds were paid to Mr. Lu, while RMB 2 million of the Loan proceeds were paid to Mr. Lyu, who subsequently transferred such amount to the Subsidiary.
• The Loans constituted material financial liabilities of the group, but were not disclosed in the Company’s prospectus.
• The Loans remained outstanding as of August 2020. Without the approval or knowledge of the other directors of the Company, Mr. Lu caused the same subsidiary to pledge its property to secure the Loans.
• Neither Mr. Lu nor Mr. Lyu, who was aware of and involved in the pledge, procured the Company to consult its compliance adviser before the pledge was provided.
• The pledge constituted a major and connected transaction of the Company and should have been disclosed and made conditional on independent shareholders’ approval under the Listing Rules. Neither Mr. Lu nor Mr. Lyu procured the Company to comply with these requirements.
• Mr. Lu — as the founder, the controlling shareholder, and a non-executive director of the Company — was in a position of conflict when procuring the subsidiary to secure his personal indebtedness. He failed to avoid that conflict and failed to act in the interests of the Company.
• Mr. Lyu — who is Mr. Lu’s son and was then the Company’s executive director, CEO and chairman, and general manager of the subsidiary — was aware of and involved in both the Loans and the pledge, yet took no steps to avoid or report the conflict of interest to the other directors of the Company.
• The conduct of Mr. Lu and Mr. Lyu amounted to wilful and/or persistent failures to discharge their responsibilities under the Listing Rules.

Findings of Breach

The Listing Committee found that Mr. Lu and Mr. Lyu breached:

• Rule 3.08 for failing to exercise reasonable skill, care, and diligence by not disclosing the Loans and the pledge to the other directors or the sponsor of the Company and for failing to avoid conflict of interest and act in the interests of the Company;
• Rule 3.09B(2) for failing to procure the Company’s compliance with the relevant disclosure and (independent) shareholders’ approval requirements under Rules 2.13(2), 3A.23, 11.07, and Chapters 14 and 14A of the Listing Rules; and
• Rule 3A.05 for failing to disclose the Loans to the sponsor of the Company.

Conclusion

The Listing Committee decided to impose the sanctions set out in the above. For further details, see the statement of disciplinary action.

2. Disciplinary Action Against Orient Securities International Holdings Limited and Former Directors (October 2025)

Key Points

The board collectively and individually bears responsibility for the management and operations of an issuer. This requires each director to take an active interest in the issuer’s affairs, obtain a general understanding of its business, and follow up anything untoward that comes to their attention. 

If the board identifies red flags, all directors must make tangible efforts to investigate and then follow up on whether, and how, the red flags were addressed. Such red flags, in the context of a money-lending business, include situations like prolonged extensions to loans being granted despite no or insignificant repayment or concerns raised by professional advisers, such as the issuer’s auditors, about the enforceability of loan collateral, among others.

In this case, the Stock Exchange:

• censured Orient Securities International Holdings Limited (the Company);
• imposed a director unsuitability statement against Lee Nga Ching (Ms. Lee), former executive director of the Company; Siu Kin Wai (Mr. Siu), former independent non-executive director of the Company; and Chan Man Yi (Ms. Chan), former independent non-executive director of the Company;
• imposed a prejudice to investors’ interests statement and censure against Tang Chung Wai (Mr. Tang), former independent non-executive director of the Company; and
• criticised Suen Tin Yan (Ms. Suen), former executive director of the Company; and Luk Claire Heun Ling (Ms. Luk), former independent non-executive director of the Company.

Facts

• This case involved serious failures of the board to appropriately manage and supervise the Company’s money-lending business (Money Lending Business).
• Despite increasing defaults of borrowers as well as the red flags raised by the Company’s auditors as to the enforceability of loans, Ms. Lee and the relevant directors failed to act and safeguard the Company’s assets, which led to significant impairment losses for the Company.
• Between 2015 and 2022, a wholly owned subsidiary, Orient Securities Finance Limited (OSFL), under the supervision of Ms. Lee as a director of OSFL, granted 45 loans totalling approximately HK$328 million to 42 individual borrowers.
• Of the 45 loans, 37 were purportedly secured through collateral in the form of properties in the PRC, and the remaining eight were unsecured loans.
• OSFL conducted some due diligence prior to granting and extending the loans. As early as 2018, the Company’s auditors had alerted the Company’s audit committee (AC) about the Company’s failure to properly register the loan collateral in the PRC, which would materially affect the enforceability of the collateral.
• The Company’s auditors advised the AC to rectify the same and/or relayed this issue to the Company’s management, which the AC failed to do.
• By 2022, the loans were substantially unpaid. OSFL, overseen by Ms. Lee, continued to grant extensions without registering collateral or taking enforcement action.
• There was no evidence that the board monitored the recoverability of the loans, which were repeatedly extended despite little to no repayment from the borrowers.
• As a result, the Company could not effectively enforce against collateral and recorded impairment losses exceeding HK$145 million by 31 March 2023, rising to HK$181 million by 31 March 2024.
• One loan granted on 29 May 2020 constituted a disclosable transaction. At the time of the extensions, out of the 45 loans, 12 constituted major transactions, and 27 constituted disclosable transactions. The Company failed to publish any announcement at the relevant times in relation to the grant or extension of the loans and failed to comply with Chapter 19 in terms of approval and announcement requirements.

Findings of Breach

The Company

• The Company breached GLR 19.34, 19.38, 19.40, and 19.41; as at the time of granting and/or extending the loans, some of the loans constituted notifiable transactions and were subject to the reporting, announcement, circular, and shareholders’ approval requirements under Chapter 19 of GEM Listing Rules (GLR).

Ms. Lee

• As a director of OSFL, Ms. Lee was responsible for the Money Lending Business. 
• She failed to conduct adequate due diligence, ensure legal enforceability of collateral, escalate critical risks, safeguard company assets, and use best endeavours to procure compliance with the Listing Rules, breaching GLR 5.01 and 5.02B(2).

Other relevant directors

• The relevant directors breached GEM Listing Rules 5.01 and 5.02B(2) by failing to supervise Ms. Lee / OSFL and the Money Lending Business, keep themselves properly informed, procure timely collection and enforcement steps, ensure adequate internal controls, and use best endeavours to ensure compliance.
• In particular, Mr. Siu, Ms. Chan, and Mr. Tang — who were members of the AC during the relevant period — failed to address the concerns raised by the Company’s auditors.
• Although the loans were granted before Ms. Suen and Ms. Luk joined the board, they were expected to make reasonable inquiries and raise concerns upon observing increasing receivables, but they did not do so.

Conclusion

The GEM Listing Committee decided to impose the sanctions and directions set out in the above. They further directed that Ms. Suen and Ms. Luk attend 18 hours of training on regulatory and legal topics and Listing Rule compliance. For further details, see the statement of disciplinary action. 

3. Disciplinary Action Against Shanghai Henlius Biotech, Inc. and Former Director (September 2025)

Key Points

Directors of a listed issuer must, at all times, take sufficient proactive steps to safeguard the issuer’s interests and assets. In relation to the issuer’s proposed investments, this duty includes understanding the nature, the parties’ rights and obligations, and the issuer’s risk associated with the investment. Directors must also ensure that the issuer complies with the Listing Rules applicable to the proposed transaction, including the requirement to consult its compliance adviser for certain prescribed transactions if the issuer is newly listed. 

For a newly listed issuer, the directors must ensure adequate and effective internal controls to monitor the use of the issuer’s IPO proceeds and to prevent and detect any use which is contrary to the intended use. Any change in use must be carefully considered and justified to safeguard the issuer’s interests. Directors must also ensure that the issuer’s compliance adviser is consulted and adequate disclosure is made as required under the Listing Rules. Failure to discharge these duties may result in public sanctions under the Listing Rules.

The Stock Exchange censured Shanghai Henlius Biotech, Inc. (the Company), criticised former executive director and CEO Scott Shi-Kau Liu (Dr. Liu), and directed Dr. Liu to attend 26 hours of training on regulatory and legal topics and Listing Rule compliance. 

Facts

• On its first day of listing, the Company entered into an investment management agreement (IMA), under which it engaged AMTD Global Markets Limited (AMTD) as asset manager, agent, and trustee to invest a sum of US$117 million on its behalf.
• This investment sum represented the entire IPO proceeds from placees arranged by AMTD as joint bookrunner, joint lead manager, and underwriter of the Company’s IPO.
• The IMA contained provisions that “the term of the agreement is for two years, which will be automatically renewed unless agreed by both parties” and “during the term of the agreement, [the Company] cannot withdraw the invested sum”.
• The use of IPO proceeds did not adhere to the intended use disclosed in its prospectus.
• The former CFO of the Company recommended the IMA to Dr. Liu, who was not involved in the negotiation with AMTD.
• Dr. Liu approved an upfront payment of the management fee to AMTD under the IMA. However, before approving the payment, he did not take adequate action to discharge his director’s duties. 
• Specifically, Dr. Liu did not examine the IMA or understand its nature and the parties’ respective rights and obligations. He also failed to bring the matter to the board for consideration or procure the Company to consult its compliance adviser. 
• Had he done so, he should have:
  • questioned whether the IMA and its terms were fair and reasonable and in the Company’s interest;
  • noted that the use of the Company’s IPO proceeds did not adhere to its intended use; and
  • procured the Company’s compliance with the Listing Rules in relation to the agreement or the use of IPO proceeds in a manner different from that as detailed in the prospectus.
• The investment under the IMA constituted a disclosable transaction to the Company. However, the Company did not disclose the agreement in its listing documents.
• The Company failed to announce the agreement or the use of IPO proceeds, which did not adhere to the intended use of proceeds as detailed in the prospectus in a timely manner.
• The Company failed to disclose the amount involved in the agreement and its effect in its 2019 and 2020 annual reports.
• Both the Company and Dr. Liu did not contest their respective breaches of the Listing Rules and accepted the sanctions and/or directions imposed on them.

Findings of Breach

• The Company breached Rules 2.13(2), 3A.23, 11.07, 11.13, and 14.34 by failing to:
  • disclose the IMA in the prospectus or other listing documents;
  • consult its compliance adviser;
  • announce the IMA in a timely manner; and
  • disclose the amount involved in the IMA and its effect in the 2019 and 2020 annual reports.
• Dr. Liu breached Rules 3.08 and 3.09B(2) by failing to:
  • apply reasonable skill, care, and diligence in respect of the IMA; 
  • use his best endeavours to procure the Company’s compliance with the Listing Rules; and
  • ensure the Company had in place adequate and effective internal controls in respect of the monitoring of the use of IPO proceeds.

Conclusions

The Listing Committee decided to impose the sanctions set out in the above. For further information, see the statement of disciplinary action. 

Disciplinary Actions by the Stock Exchange — Others

Disciplinary Action Against Director of LET Group Holdings Limited (Delisted) and Summit Ascent Holdings Limited (Delisted) (September 2025)

Key Points

The Listing Rules are designed to maintain an orderly, informed, and fair market for the trading of securities and to protect shareholders and investors. Every director is required to comply to the best of his/her ability with the Listing Rules and use his/her best endeavours to procure the issuer to comply with them. 

The Stock Exchange has zero tolerance for any director who knowingly or recklessly disregards Listing Rules requirements and/or his/her director’s duties. Such behaviour constitutes serious misconduct and can result in a severe sanction against the director. Commercial reasons do not override the obligations of issuers and their directors to comply with the Listing Rules. In case of doubt, issuers are encouraged to consult the Stock Exchange.

The Stock Exchange imposed a director unsuitability statement and censured against Lo Kai Bong (Mr. Lo), executive director and chairman of LET Group Holdings Limited (LET) and Summit Ascent Holdings Limited (SA) (together, the Companies). Further, the Stock Exchange directed that:

• the listing of LET’s shares be cancelled under Rule 2A.10A(2)(b) if Mr. Lo continued to occupy a position as director or within senior management of LET or any of its subsidiaries upon the expiry of 14 days from the date of publication of the statement of disciplinary action; and
• the listing of SA’s shares be cancelled under Rule 2A.10A(2)(b) if Mr. Lo continued to occupy a position as director or within senior management of SA or any of its subsidiaries upon the expiry of 14 days from the date of publication of the statement of disciplinary action.

Facts

• Mr. Lo became the controlling shareholder of LET in May 2022 (Change of Control), with LET holding approximately 69.7% of SA’s issued shares. 
• The Companies’ principal business was a hotel and gaming operation in Russia, held through a chain of subsidiaries, with Oriental Regent Limited (ORL) as the immediate holding company of the Russian business. 
• In late 2022, the Companies considered selling the Russian gaming business due to uncertainties arising from the Russia-Ukraine war and related sanctions, which were adversely affecting operations and prospects. 
• Such sale would constitute a very substantial disposal (VSD) to the Companies under Chapter 14 of the Listing Rules, requiring shareholder approval.
• The sale of the gaming business would result in each of SA and LET failing to maintain a sufficient level of operations and assets of sufficient value to support their operations as required under Rule 13.24. Therefore, they would be suspended from trading under Rule 6.01(3) until they re-complied with Rule 13.24.
• With respect to LET, the sale of the gaming business was restricted under Rule 14.06E as it would represent a disposal of a material part of LET’s existing business within 36 months after the Change in Control in May 2022, and the remaining group of LET would be unable to meet the new listing requirements under Rule 8.05. If LET proceeded with the sale under such circumstances, its failure to comply with Rule 14.06E would call into question its suitability for continued listing, which would result in LET being suspended from trading under Rule 6.01(4). LET would also be required to meet the new listing requirements under Rule 8.05 as if it were a new listing applicant. If LET failed to do so within the 18-month remedial period, it would be delisted under Rule 6.01A.
• Despite the warnings and reminders given by the Stock Exchange, in December 2023, Mr. Lo procured ORL to proceed with the proposed disposal for US$116 million, representing a 30% premium over the business’s fair value. 
• At board meetings on 10 January 2024, the Companies’ legal advisers reiterated the regulatory risks, including breaches of the Listing Rules, the Code on Takeovers and Mergers, and the requirement for shareholder approval. 
• All other directors of the Companies disapproved the disposal and indicated their intention to resign if it proceeded. Mr. Lo procured ORL to sign the sale agreement and voted in favour of the disposal at a special general meeting of ORL. 
• Following the public announcement of the disposal, both the Stock Exchange and the SFC expressed concerns about potential rule breaches of the Listing Rules and the Takeovers Code and the risk of trading suspension. 
• Regardless, the Companies indicated their intention to proceed. This indication led the SFC to direct the Stock Exchange to suspend trading in the Companies’ shares in February 2024. The sale ultimately did not complete due to the buyer terminating the agreement.
• The actions resulted in the resignation of all other directors, leaving Mr. Lo as the sole director and the Companies’ non-compliance with board composition.

Findings of Breach

• Mr. Lo blatantly or recklessly disregarded his responsibilities as a director under the Listing Rules.
• The Companies’ legal advisers, the Stock Exchange, and the SFC provided numerous reminders and warnings about the actual and potential breaches of the Listing Rules and the Takeovers Code, as well as the serious consequences of proceeding with the proposed disposal. However, Mr. Lo knowingly and/or recklessly caused, permitted, and/or procured ORL to proceed with the proposed disposal.
• Mr. Lo also disregarded the disapproving directors’ objections to the proposed disposal. This led to their resignation from the boards, resulting in the Companies’ non-compliance with (i) the board composition requirements under Chapter 3 of the Listing Rules, and (ii) the publication of the financial result and report requirements under Chapter 13 of the Listing Rules.
• The Stock Exchange did not accept Mr. Lo’s justification that the disposal was in the Companies’ best interests due to commercial reasons, as these did not outweigh the regulatory breaches and resulting harm to shareholders.

Conclusion

The Listing Committee imposed the sanctions and directions set out in the above. For further details, see the statement of disciplinary action. 

Disciplinary Actions and Proceedings by the SFC

Disqualification Orders of Former Directors of Superb Summit International Group Limited (September 2025)

The SFC obtained disqualification orders in the Court of First Instance against another five former directors of Superb Summit International Group Limited (Superb Summit): Law Wai Fai (Mr. Law), Li Jun (Mr. Li), and Cheng Man For (Mr. Cheng) (former executive directors), as well as Qiu Jizhi (Mr. Qiu) and Chan Chi Yuen (Mr. Chan) (former independent non-executive directors). To date, a total of 10 former directors of Superb Summit have been disqualified.

Under the latest orders, Mr. Chan is disqualified for four years, Mr. Law and Mr. Cheng for three and a half years each, Mr. Qiu for three years, and Mr. Li for two and a half years. During the disqualification period, they are prohibited from acting as a director or being involved in the management of any corporation in Hong Kong or elsewhere.

The disqualification orders were granted after the five directors admitted to breaching their duties and acting negligently in approving Superb Summit’s 2007 and/or 2009 acquisitions of a target company that purportedly held substantial forestry assets which, in fact, did not exist. The Court found that, in relation to the 2007 acquisition, Mr. Law, Mr. Li, Mr. Qiu, and Mr. Chan failed to review key transaction documents, such as the agreements purporting to evidence ownership of the forestry assets, or to scrutinise the methodologies and assumptions used by professional advisers during due diligence. They also failed to verify the authenticity of documents or the existence of the assets, despite the size and significance of the transactions.

For the 2009 acquisition, Mr. Law, Mr. Cheng, and Mr. Chan failed to properly consider the ownership of the alleged forestry assets and approved an announcement and circular containing false or misleading information about the non-existent assets. The Court noted that these directors did not exercise the level of care, skill, and diligence expected of company officers, particularly given the materiality of the assets and the impact on the company’s financial statements.

In granting the disqualification orders, the Court emphasised that the directors’ failures resulted in material overstatements in the company’s accounts and significant sums being paid for non-existent assets, causing unfair prejudice to shareholders. The Court considered that the directors’ conduct fell well below the standards expected of directors and justified their removal from the management of any corporation for the specified periods, even though there was no finding of dishonesty or personal gain. The directors’ cooperation with the SFC was taken into account as mitigating factors in determining the length of the disqualification.

The SFC’s proceedings against other former directors and officers of Superb Summit remain ongoing. For further details, see the press release by SFC. 

Takeover Matters

Takeovers Bulletin (Issue No. 74) (October 2025)

The SFC recently published Takeovers Bulletin (Issue No. 74). Key highlights include:

Redaction From Documents on Display

• Notes 1 and 2 to Rule 8 of the Takeovers Code provide that documents that are required to be displayed online and made available for inspection (DoDs) must be displayed from the date the offer document or the offeree board circular is published until the end of the offer period. Additionally, they must be submitted in electronic form to the Executive, before the despatch of the relevant document to shareholders, for display on the SFC’s website.
• Any redaction proposals should be discussed with the Executive as early as possible and in any event before submission of the relevant DoDs to the WINGS platform.
• It is necessary and appropriate for protected personal information (e.g., HKID/passport numbers, residential addresses) to be redacted where public disclosure is prohibited under the Personal Data (Privacy) Ordinance (Cap. 486) or equivalent laws. It is the responsibility of the offeror and the offeree company (as the case may be) to seek advice and assistance from their advisers where necessary and identify and redact such data before uploading files to WINGS.
• Parties should provide the following documents in order for the Executive to consider any redaction proposals:
  • a submission explaining the basis for redaction;
  • a marked redacted DoD (showing clearly the redactions) with the following front-page statements in red:
    • a statement to the effect that certain information contained in the document has been redacted, together with a brief description of the nature of the information redacted and reasons for redaction;
    • a confirmation that the remaining information is considered adequate by (i) the offeror/offeree company and its directors, and (ii) the financial adviser to the offeror/offeree company for the purpose of disclosing the nature and significance of the document and for the offeror/offeree company to fulfil its relevant disclosure obligations under the Takeovers Code; and
  • written confirmations from the offeror/offeree, its directors, and financial adviser in the same form as the confirmation above. 
• The Executive should be consulted at the earliest opportunity if there is any doubt as to whether certain information may be redacted from the DoDs.

Disclosure of Effects of Dividends and Other Distributions on Offer Price

• If an offeror intends to reduce the offer consideration in the event of any dividends or other distributions which might subsequently be paid or become payable by the offeree company, the offeror must specifically reserve the right to do so in the Rule 3.5 announcement, indicating clearly whether the reduction will be equivalent to all or a quantified portion of the specified dividend or other distribution.
• In the absence of a clear indication of its intention, the offeror should not deduct any subsequent dividends or other distributions from the offer consideration.
• In contrast, an offeror is normally free to increase the offer consideration after a Rule 3.5 announcement unless it has made a “no increase” statement.

Revisions to Practice Note 9 — Exempt Fund Manager and Exempt Principal Trader Status

• PN9 has been revised to provide further guidance on the factors that the Executive will normally take into account when considering a financial group’s eligibility to apply for the exempt fund manager or exempt principal trader status under the “fast-track” method. The Executive will take all relevant factors into account, including:
  • the complexity of the group’s business operations, such as the number and types of services provided or business carried on by the group; 
  • the total market value of the assets under management by the group for the past three years; 
  • the consolidated net asset value and revenue of the group for the past three years; 
  • the group’s international presence, such as the number of offices outside of Hong Kong; and 
  • the number of staff employed by the group, including those located outside of Hong Kong.

See the marked-up version of PN9. For further details, see the Takeovers Bulletin (Issue No. 74).

Conclusion

The September and October updates underscore that enforcement of foundational governance standards remains a regulatory priority. Boards should refresh training and controls to ensure complete and accurate disclosure at IPO and thereafter; active monitoring of operation of businesses, collateral registration, and recoverability; robust governance of IPO proceeds consistent with prospectus disclosures; and strict observance of notifiable transaction and Takeovers Code requirements. Market participants involved in takeovers should also align document management and disclosure practices with the latest guidance on redactions and dividend-related price adjustments. By reinforcing these controls and processes, listed issuers can mitigate enforcement risk and strengthen investor confidence in a demanding regulatory environment.