Latest decisions relating to breaches of directors’ duties

On 22 April 2020, the High Court ordered some former directors of Long Success International (Holdings) Limited be disqualified from being directors for two to five years. The former chairman of Long Success caused Long Success’s subsidiary to acquire a company. The seller provided a profit guarantee and when the acquired company did not achieve the guaranteed profits, the chairman waived the seller’s obligation to pay. The Court found that Long Success had no objective, rational or commercial reason to enter into the transaction and the respondents had neglected their duties as directors. 

On 27 April 2020, the Listing Committee censured the former executive directors of Champion Technology and its subsidiary, Kantone, and criticised the former non-executive directors of the companies for failing to fulfil their fiduciary duties and breaching Rule 3.08(f) of the Listing Rules. The executive directors caused the companies to purchase a large quantity of cultural products without expert authentication/valuation. The acquired products were later written off entirely by auditors. The Listing Committee found that the non-executive directors failed to enquire about the acquisition and instead relied completely on the executive directors to handle the acquisition.