In our regulatory alert issued in June 2012, we reported on the Court of First Instance's unprecedented order (in proceedings brought by the Securities and Futures Commission ("SFC")) against Hontex International Holdings Company Ltd ("Hontex"). Hontex was ordered to make a repurchase offer to about 7,700 investors who had subscribed for Hontex shares in the initial public offering in December 2009 or purchased them in the secondary market during the 3 months after its shares were listed.
The orders were the first of their kind made under section 213 of the Securities and Futures Ordinance ("SFO"). The orders were made by agreement between the SFC and Hontex, 12 days into the trial. Essentially, Hontex acknowledged, for the purpose of the civil proceedings, that information in their prospectus was materially false and misleading.
On 24 September 2012, Hontex issued its offer document for the share repurchase (Repurchase Offer).The Repurchase Offer was made to all shareholders (except Hontex's controlling shareholders) holding Hontex shares on 20 June 2012 (that being the date of the Court of First Instance's order), who subscribed for or bought Hontex shares and still hold them. If all shareholders accept the Repurchase Offer, Hontex will pay out a total of $1.03 billion to approximately 7,700 shareholders.
The Repurchase Offer is being administered by court-appointed administrators and will remain open for acceptance until 4:00 pm on 29 October 2012. If the level of acceptance of the Repurchase Offer is less than 50% as at that date, Hontex will, at the direction of the SFC and the administrators, extend the offer period until 26 November 2012.