CHOW TAI FOOK's agent reaches a settlement with the Securities and Futures Commission, must pay up to 1.5 billion to GIORDANO INT'L independent shareholders

The China Securities Regulatory Commission announced that it has reached a settlement agreement with Huafu and Clear Prosper regarding the violations of the Code on Takeovers, Mergers and Share Buybacks by agents of Chow Tai Fook and its concert parties during the share transactions of Giordano International (00709.HK).

After an in-depth investigation into Giordano's equity structure, the executives concluded that two other Giordano shareholders outside the Chow Tai Fook agent group acted in concert with the Chow Tai Fook agent group when acquiring or consolidating control over Giordano. Therefore, for the purposes of the two codes, the total shareholding and transactions of those shareholders in Giordano should be taken into account.

On this basis, the executives determined that since the relevant concert group exceeded a 30% stake in Giordano on May 18, 2016, it triggered the obligation to make a mandatory offer at HKD 3.6 per share on the same day. However, it did not make a mandatory offer for Giordano in accordance with the provisions of Rule 26 of the Code on Takeovers and Mergers.

In addition, the executives found that Clear Prosper's announcement on June 2022 to make a voluntary general offer for Giordano at HKD 1.88 per share constituted a violation of Rule 5 of the Takeover Code on September 13, 2022, because the only condition of the voluntary offer had actually been met based on the shares held by the relevant concert group and the total voting rights represented by the valid acceptances received, but the voluntary offer was announced to have lapsed on September 13, 2022.

According to the settlement agreement, Huafu and Clear Prosper agreed to make cash payments to the independent shareholders who held Giordano shares on the date the executives determined that the above violations occurred. Depending on the number of successful claims received, the maximum amount payable could reach approximately HKD 1.5 billion