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On 29 November 2016, the Market Misconduct Tribunal (“MMT”) issued a report finding that AcrossAsia Limited (“AAL”), its former Chairman and Independent Non-Executive Director (“Cheok”), and its Chief Executive Officer and Executive Director (“Ang”) breached the disclosure obligations under the Securities and Futures Ordinance (the “SFO”) by failing to disclose inside information as soon as reasonably practicable.

This is the first concluded MMT case dealing with breaches of the disclosure obligations since it came into force on 1 January 2013. This alert discusses the implications of the MMT decision and suggests practical tips to listed companies and their officers for managing their disclosure obligations.

Implications for listed companies

This case highlights the importance of making timely disclosure of inside information and provides useful tips on what constitutes “as soon as reasonably practicable”.

In this case, the relevant information involved foreign court documents concerning potential insolvency, possible loss of control over a major asset of the listed company and a material increase in financial risks. The MMT considered the time when the obligation to disclose was triggered (i.e. when it was reasonably practicable for AAL to disclose the inside information), and took into account the date when legal advice was sought. This is a good reminder for listed companies that prompt legal advice and careful attention to the handling of court documents continue to be of utmost importance.

Background of the case

AAL is listed on the Growth Enterprise Market of The Hong Kong Stock Exchange. Following a dispute between AAL and its Indonesian subsidiary (“Subsidiary”) arising out of a loan facility, the Subsidiary filed a petition against AAL on 20 December 2012 under the Indonesian Law on Bankruptcy and Suspension of Obligation for Payment of Debts. The Central Jakarta District Court then issued a summons to AAL. The court documents, which were in Bahasa Indonesia, were received by AAL’s Hong Kong office on 2 January 2013. Their English translations were circulated to Cheok and Ang on 4 January 2013. However, AAL did not disclose such information to the public until 17 January 2013.

The SFC alleged that the said insolvency petition and the said summons together with their contents was “inside information” within the meaning of section 307B of the SFO. These documents contained information about AAL which was not generally known to the persons who were accustomed or would be likely to deal in the listed securities of AAL but would, if generally known to them, have been likely to materially affect the price of those securities.

The SFC commenced proceedings in the MMT against (i) AAL for failing to disclose inside information as soon as reasonably practicable and (ii) Cheok and Ang as officers of AAL for their reckless or negligent conduct causing the alleged breach by AAL of the statutory disclosure obligations.

AAL, Cheok and Ang admitted they were in breach of the statutory disclosure requirement on the basis of them being negligent. After considering the evidence and the admissions by the defendants, the MMT concluded that AAL had failed to disclose inside information to the public as soon as reasonably practicable as required under the SFO. The MMT acknowledged that both Cheok and Ang were in a difficult situation as this was a newly introduced legislation and the original court documents received were in Bahasa. Therefore, the MMT found no evidence of intentional or reckless misconduct. Cheok and Ang were found to be negligent instead. The MMT fined AAL and Ang $600,000 each, and Cheok $800,000 and ordered Ang and Cheok to undergo training.

Reasonably practicable

One of the issues considered by the MMT was the date on which it was reasonably practicable for AAL to disclose the inside information.

  1. The SFC alleged that the failure to disclose inside information arose on or about 4 January 2013 (when the English translations of the court documents became available).
  2. AAL and Cheok submitted that it should be on 8 January 2013 when legal advice was obtained in relation to the Indonesian court documents.
  3. The MMT considered that it was unrealistic to expect the announcement to be published on 4 January 2013 as proper legal advice had not been received. Therefore, the relevant date should be 8 January 2013.

The MMT made it clear that “you cannot announce what you don’t understand”. The MMT allowed indulgence in this case as the relevant court documents were in Bahasa and concerned foreign laws. This notwithstanding, the time allowed for understanding the information in other cases will always be fact-sensitive.

Actions to consider

This MMT decision serves as a reminder for listed companies to review their internal polices and procedures in disclosing inside information. Good practices include:

  1. Ensure material information is promptly identified and escalated for the directors to decide whether disclosure is necessary.
  2. Seek legal advice promptly and keep records of steps in seeking and considering the advice.
  3. Maintain a timely and structured flow of information relating to events and circumstances about the company.
  4. Maintain and regularly review a sensitivity list identifying factors which may give rise to the emergence of inside information.


This is the first MMT case in relation to the late disclosure of inside information. The MMT will soon decide on breaches of the disclosure obligations in other cases with different fact patterns. We will continue to monitor developments and report on any further updates.


Cynthia Tang is the head of the Dispute Resolution Group for the Firm’s Hong Kong and China offices. She has over 25 years of experience in Hong Kong and Asia. Chambers Asia Pacific, PLC Which Lawyer? and Asia Pacific Legal 500 have ranked her as one of the leading lawyers in the Financial Services/Regulatory field for 5 consecutive years. She previously served on a number of committees in the Securities and Futures Commission and is currently appointed by the Hong Kong Government as a Member of the Standing Committee on Company Law Reform and Disciplinary Panel A of the Hong Kong Institute of Certified Public Accountants. She is also a China-Appointed Attesting Officer.


Bryan Ng is a partner in Baker McKenzie's Hong Kong office and a member of the Firm's Dispute Resolution Group. He has written articles and delivered trainings and seminars on topical issues including regulatory enforcement matters. Mr. Ng’s practice focuses on disputes related to financial services, regulatory investigations, commercial disputes, and insolvency-related matters. He advises and represents clients from the financial industry in regulatory investigations and disciplinary proceedings. Mr. Ng also represents clients in arbitration and court proceedings, including shareholders' disputes and judicial review.