The Securities and Futures Commission (SFC) of Hong Kong has commenced legal proceedings in the Court of First Instance to seek disqualification and compensation orders against eight former directors of 3DG Holdings (International) Limited (formerly known as Hong Kong Resources Holdings Company Limited) for their alleged failure in preventing misappropriation of $74.4 million in corporate funds.
The eight directors were all serving board members of HK Resources at the material time. They are: Mr Xu Zhigang, executive director and chief executive officer; Mr Wu Xiaolin, Mr Wilfred Lam Kwok Hing, Mr Zhao Jianguo, Ms Dai Wei, executive directors; Mr Loke Yu, Mr Anthony Fan Ren Da and Mr Xu Xiaoping, independent non-executive directors.
The SFC’s investigation revealed that on 8 June 2017, HK Resources acquired a 100% equity interest in a company with a money lender’s licence. Between June 2018 and March 2019, HK Resources granted 12 loans totalling $74.4 million through its new money lending business, but all of the loans were in default when they came due.
As part of the legal action, the SFC is seeking compensation orders against the eight directors to pay, whether individually or jointly and severally, HK Resources the sum of $74.4 million, being the cash paid out for the 12 loans. Specifically, the SFC alleges that the acquisition and the loans formed part of a scheme to misappropriate HK Resources’ cash.
In seeking disqualification orders, the SFC alleges that all the directors breached their duties owed to HK Resources and failed to act with proper skill, care, and diligence in exercising their powers and carrying out their functions.
